The Myth of More Investors
Optimism can Sometimes be a Trap
Entrepreneurs are optimistic by nature. It is precisely that mindset that fuels the enthusiasm and drive necessary to push through the constant rejection that comes with growing and building a company from scratch. However, during the institutional capital raise process, that unbridled enthusiasm and optimism can unwittingly operate as a trap.
Many entrepreneurs working through an institutional capital raise optimistically operate under the dangerous ‘Myth of More Investors.’ The foundation of the myth is that the only thing a growth-stage entrepreneur raising capital needs to focus on is meeting more and more investors. The more the better, with a focus relying on quantity over quality.
The Business is Awesome - We Just Need to Meet More People
The entrepreneur’s mindset is that the product is great, the business strategy is great, the team is great, and the message is great. The one and only thing missing is more investor meetings. With that mindset, the logical strategy is to set up as many investor meetings as is humanly possible and jump on the pitch meeting hamster wheel until investor capital magically drops into the account.
Like any enduring myth, this one has a kernel of truth at its core. After all, who doesn’t want to meet more investors? However, this reasoning is flawed.
Seeking ‘More’ May be a Waste of Time and Money
The flawed reasoning is that, at the growth-stage, institutional investors are often looking for very similar characteristics when evaluating potential investments. Therefore, if a company has already met with several institutional investors that have all passed on the deal, there is a high probability that they are going to hear the same answer for the next several hundred institutional investors as well.
In this instance, success is not a matter of simply meeting more investors. Not only is meeting more investors not the solution, meeting more investors is actually a significant waste of time, effort, and money.
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