Leen Kawas | Entrepreneur, Inventor, Innovator and Leader | Managing General Partner at Propel Bio Partners.
Entrepreneurs and investors are both needed to enable the advancement of companies and lead to the successful development of products. Entrepreneurs need to be deeply committed to their businesses, devoting long hours to elevating their companies. They perform a balancing act daily, prioritizing and juggling critical decisions and challenges.
As a former biotechnology entrepreneur, this aptly describes my work days then, and it is not that different moving to the investment side.
Investors have to make daily decisions about where to dedicate their focus and which portfolio company needs their help or attention. They monitor industry trends, source deals and evaluate the overwhelming number of pitch decks that land in their inboxes. They focus on finding opportunities that offer the best chances of a desirable return.
Throughout my professional career, I have gained valuable insights from those who have been in my shoes. Without exception, this advice has helped me accomplish my goals on both the micro and macro scales. Here, I offer three nuggets that may help entrepreneurs better navigate their interactions with potential investors.
1. Good Organization Is Key
First, good organization lays the foundation for success. Peter Strack, a serial entrepreneur and Forbes Business Council member, noted that a well-organized entrepreneur inspires confidence in the leader’s ability to manage their company. I find that organization is critical not only to bring investors into your mission but also so you can communicate effectively within your organization and deliver on your promises.
This type of organizational thinking requires a great deal of discipline, and Strack writes, “When you are your own boss, you may only have your own self-discipline to hold you accountable.”
I’ll add another salient point. In conversations with potential investors, they find that a well-organized entrepreneur has an uncluttered mind and an increased ability to focus on the issues at hand. This enables them to better absorb constructive feedback, often leading to more positive outcomes. More organized entrepreneurs tend to be able to better listen and implement feedback, which oftentimes makes them more successful.
2. The Word “No” Is Just A “Not Now” Or “Maybe”
Sales forms the foundation of all entrepreneurial ventures. Regardless of the potential of a technology, product or service—whether it is a late-model car or a drug development platform—the entrepreneur wants someone in their target market or investment to say yes.
Of course, for various reasons, the prospect may say no. Maybe the platform is too early, the product differentiation is not clear or the investor is just busy with other pressing priorities. Maybe it’s just not a good fit at the time. Sometimes, the entrepreneur hasn’t uncovered the real objection keeping the prospect from saying yes.
As an entrepreneur, I regularly navigated this maddening scenario. However, I didn’t react negatively to each potential investor. Instead, I chose to step back, regroup, ask for feedback on why it wasn’t a good fit and continue to optimize the strategy and our programs. When I was the CEO of a company, I believed in the statement that “no is just a maybe or not now.” I continue to take this mantra with me into the investing space, where it’s also relevant.
3. Proposal Review Times And Bandwidth Issues
After making your pitch, it’s natural to hope for an immediate yes. Sometimes, the prospect believes the offering aligns with their needs, and they immediately jump on board. If they don’t, the entrepreneur must navigate the prospect’s hesitancy (and often their objections) in an effort to get clear feedback or agreement.
When pitching to an investor, a different set of dynamics comes into play. Regardless of the industry, investors often allocate millions of dollars to support a particular company’s growth. Before making this substantial commitment, an investor thoroughly evaluates each candidate’s pitch deck, financial health and other relevant factors. Completing the financial due diligence is especially important.
Entrepreneurs should understand that the investor needs time to decide if the proposal represents a suitable investment risk. Alternatively, the investor may have already spent their available funds for the current cycle.
As someone who is now an investor, I can confirm that it takes a great amount of due diligence and time to review proposals and investment potential. So if you hear back immediately, that’s likely why. Additionally, some investors may turn down opportunities simply due to bandwidth rather than an idea not being potentially successful.
How Entrepreneurs Can Thrive In The Investment Arena
By necessity, entrepreneurs are passionate about their company’s mission. They often possess a seemingly unlimited supply of enthusiasm and energy. In fact, more often than not, they must be reminded to devote time to their personal well-being. This caveat certainly applied to me.
To succeed as an investor, though, a leader must adjust their mindset and their operational parameters. First, they should adopt the “slow and steady” approach rather than being rushed into potentially disastrous investment decisions. Along these lines, I don’t advise jumping into an investment just because others in the industry have hopped on the bandwagon.
A strategic game plan and evaluation criteria can enable an investor to objectively track a company’s performance over time. This plan can also help the investor focus their attention rather than taking a scattershot approach.
Finally, when dealing with a fair investor, a candidate’s above-average pitch and/or existing professional relationship shouldn’t automatically mean your company will be selected. Regardless of the pitch’s source, I believe that the best investors go with the maximum due diligence with every candidate. Applying the same standard to everyone ensures a fair selection process and sets the stage for a mutually beneficial investment relationship.
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