Practical Funding

Inconsistent feedback from potential investors is normal

Founders are often frustrated by inconsistent feedback from investors after a pitch meeting.

  • Too low of a valuation. Or too high.
  • Too much story. Or not enough.
  • Traction means $20K MRR or $1M ARR. Not enough customers.
  • The key metric is LTV/CAC. Or monthly revenue growth.
  • You need a co-founder who has done sales. Or built product.
  • Your developers need to be employees. Or outsourced.
  • Not enough TAM. Or not enough focus.
  • You can’t build a big company in your town.

And many investors have changed their investment criteria this year in the down market.

Inconsistent feedback is a universal experience for founders with any level of experience.

(Except for those founders who don’t raise any outside funding!!)

Why aren’t investors more consistent with their feedback to startup founders and SaaS CEOs?

Here’s why:

1) You probably are talking to too many investors that aren’t a good fit for you. This is most common for first-time founders.

Investment funds are all different with different structures, fund sizes, and fund goals. Investors are individual people who each have different personalities, backgrounds, moods, and communication styles.

And there are a TON of new investors who are new to the game and are still figuring out their own baseline expectations and processes. Many are not that smart yet.

Founders should ask every investor UP FRONT what their investment criteria are.

What have they invested in so far? What does a winning investment look like in their fund or angel portfolio? Why are you interested in talking to me today?

If it’s not a good fit, you probably shouldn’t pitch. Or at least you should understand their feedback when they say “no thanks.”

There’s another big reason that isn’t so logical:

2) Investors don’t want to tell you “I don’t believe you can build something valuable in this space so I won’t invest.” It’s not them, it’s you.

Or, “We like you and your business, but we like another investment MORE so we’re investing in them.” It’s not you. You’re just competing with every other deal they see.

A small percentage of investors will tell you what they really think, but founders almost never take it the right way. So most experienced investors won’t tell you the real reasons.

  • Instead, they say things like:
  • Your TAM isn’t big enough
  • Not enough traction
  • The timing isn’t good
  • Someone on the investment committee didn’t like the space
  • No reply to any of your follow-up emails

So you have to sort out the feedback that is real and useful for you. Maybe none of it is useful.

If you get negative and inconsistent feedback, some of these investors are probably not a good fit for you.

And the rest just don’t believe in you and your vision for the company–relative to their other investment opportunities.

Regardless, you should hear any investor feedback as “I wasn’t able to convince them our startup was a perfect fit for them and that I’m the CEO to lead this to a successful exit.”

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