What was your first meeting with an angel investor like?

Let me at least share my first meeting with a VC.

It went really well. The very first VC I ever pitched as a founder offered to fund us tentatively with $5m — by the end of the first meeting!

And … then I blew it.

What happened? Well, first the intro was from an ex-boss, so I had a strong warm referral. I also had a pretty good deck and presentation and team. Market timing was also on our side. We had 2 strong early reference customers. And … we were a pretty good duo pitching, my co-founder and me. Bear in mind, I’d done a lot of VC pitching as a VP as start-ups before. I knew what a good pitch was, and what good metrics were, and what VCs were interested in. I was new as a founder, but not new to fundraising.

We fairly quickly got a draft term sheet for $5m on something like a $10m pre. Not a great deal today given the early traction we had, but plenty fair for the time.

I went and asked some folks what to do. I was advised to push back and ask for a significantly higher price. So … I did. Without even thinking about it. I asked for something like $7m-$8m at a significantly higher price. The details I sort of forget. But I know I asked for materially more.

The VC got offended / pissed / angry / spooked / worried / something. I don’t know what to this day. But he went dark.

I asked him 4 weeks later what happened, and after 3 emails or so, he finally responded. He said I had just pushed him too hard. Without knowing it.

But knowing what I know now, I think I pushed him out of his comfort zone. His fund wasn’t huge, and $5m was likely a “bite size” he was comfortable with. But more than that was just too big of a check. So he walked.

And in the end, there was drama, and we had to settle for less than $8m pre from another, worse investor. So it wasn’t worth it on any level.

So then I learned to push, for sure — but to listen. Carefully. To learn what each VC is able to do, is comfortable to do. And not to accidentally cross those lines. Especially without knowing it.

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Published on July 24, 2019

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