How do I make an angel investor move faster on a deal?
The investor is very excited but he seems very slow on the deal. We've been in communication for 3 weeks. I recently gave him access to the invesment package. But There was A tech issue on a website where I organize the package. So, he couldn't see the material. He will checking this week, I have no doubt. I would love to know tactics to make the deal move forward to close quick. Right now, My startup is burning a lot of capital. So, I need the capital.
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I have had to manage 4 angel rounds with 50+ angels (from 9 angel groups). Angel rounds can take 3-4 months to close even when managed by a lead group. Set your expectations right and follow up, but don't be a pest. Angels are not VCs, they are investing their own money, most are not professional investors, they don't have bunch of associates, so don't expect them to be quick. – Apollo Sinkevicius 12 years ago
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Thank You, It is so true. When its your money you think more and more – Zapoo 12 years ago
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Well I would argue that investing in a startup is NOT a rational decision: a startup is about dealing with uncertainties, unknowns and the most likely outcome is failure. So the more time goes by, the more time a person takes to consider your investment, the less likely a deal comes together. This is why I think it's critical to move the investor and the deal forward fast because time is your enemy. During your conversations, you should also ask your investor about his experience in funding startups and be clear about what both of you are looking for in order make a deal happen. – Frenchie 12 years ago
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He's an interesting video from the Stanford business school: http://www.youtube.com/watch?v=mHVJF9VaWfo Take a look at minute 38 for 5 minutes! And then why not the whole video too, it's quite interesting. – Frenchie 12 years ago
2 Answers
In 3-4 days, after he's had a reasonable amount of time to review what you sent, you ask him what he would need to make the deal happen and set a time perspective. You might say something like:
"We're looking to move forward with our business and for that we need your investment. Apart from what you already have and what we've already discussed, what else would you need to see to make the deal happen this week?" "Are you ready to move forward and make that investment this week?" "Are you able/in a postion to make the investment now?" "Can we count on your investment this week?" If he draws up an objection, then it's even easier (as long as you can overcome it of course): "If we do/provide/agree on X, are you ok to make the investment?" - "Yes" - "Ok, great, then I'll come by your office/house to pick up the check; when would it be most convenient for you? Ask for the check! Most people just don't ask and keeping the conversation going in circle. ASK!!!! People don't want to invest in a CEO who can't close deals, but they'll never tell you that. Practice these sentences if you need to, repeat them 50 times in a row, adapt them to your style and ASK. And most importantly, after you ask, you shut up: you let the silence be, and you let him give you the answer. Get comfortable with silence. Good luck.
PS: nothing ever gets closed via email. It's sometimes over the phone and most of the time in a face-to-face meeting.
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+1 Great advice on getting to a timeframe. Don't know if there is agreement on terms yet, so I wonder if the "drop by and get the check" would work here. How would you suggest approaching this if there is no terms agreement yet? – Jim Galley 12 years ago
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Well then you simply say "Ok, I'll drop by and we'll sign the agreement". Or, if the agreement is not in paper form yet, you say "Ok, we'll get the lawyer to draft the agreement and then I'll drop by to finalize it. Are you available next Wednesday in the afternoon?". – Frenchie 12 years ago
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I love your answer. Its all about being direct and keeping things clear. What if the investor is from another country? I spoke to him on the phone and he wants to meet in person. I'm not sure if he want me to go to his country or He meets me in the states. Most likely he will come to states. But What should I do if he wants me to go to his country with no deal on the table yet? – Zapoo 12 years ago
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Well then you don't go!! You work out the agreement until it's in a ready-to-sign format and then, when it's all worked out and you both agree on the terms, you can say something like "ok, I'll book a flight and I'll see you next week." You don't want to leave open-ended situations. In the meantime, you can say something like "Do you want to make the investment? - Yes. - Ok, then let's work on the shareholder agreement" and you escalate the conversation from deciding about the investment to actually getting the deal in place. – Frenchie 12 years ago
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BTW, if he asks you to come over and talk, then make sure HE pays for the ticket. That way he'll have a STAKE in the meeting. I don't think it'd be a good idea for you to spend YOUR money just to go talk; that's what the phone's for. If he insists then have him pay for the flight. – Frenchie 12 years ago
Unless you have a competing investor or a time sensitive business opportunity, you have a better chance of making an iceberg melt than making an investor to move forward quicker than they want.
That said: did you fedex him a printout of your online "package"? Did you ask if there were any due diligence items he requires to make a decision? Do you know what his investment timeframe is? Is there anything else s/he is considering investing in? All would help paint a better picture on what timeframe s/he is operating under.
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I organized all the the material on a website. So I invited him to look at it. He said what most impotant to him are the financial projections, executive summary, etc. Everything he needs is posted on the website. He said he will take a look at the material through the website. I dont know his timeframe. How should I ask? I dont have a competeing investor. This is were I suck. – Zapoo 12 years ago
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Be persistent, but not annoying. There is the possibility that s/he is busy on multiple fronts, and needs more time. Finding a way to keep on their radar screen is a challenge - if you have relevant company news for them (signing a new deal, releasing a new version, etc), by all means use that as a way to keep in touch. I'd also be careful not to read into things too early - looking at the financials doesn't equal signing a check. Its part of the due diligence process. I know - frustrating... happens to all of us chasing funding. – Jim Galley 12 years ago
