What do investors want?

I’m an anomaly. I’m an entrepreneur, an angel investor and an institutional investor (venture capitalist) all at the same time. I’ve been an entrepreneur for 30 years, and angel investor for 7 years and a venture fund manager for 3 years. As an entrepreneur, I’ve raised about $45 million from top venture capitalists. As an angel, I’ve invested in 31 startups and as a venture capital fund manager, I’ve screened thousands of companies and invested in 19 deals. Perhaps that puts me in an advantaged position to write a blog about what investors want.

Reading about the frustrations of some entrepreneurs, one might think that “what do investors want?” is a question for the ages. I beg to differ. In my experience, the answer can be summed up in five points. If investors aren’t pursuing you, it’s probably because you’re failing to do your best on one or more of these.

Point one: Investors are individuals of great diversity. Any generic answer to “what investors want” is going to be of very little value. Get to know the individual investor and their fund. They are very open about what they’re looking for. Are you in an industry in which they invest? Are you at the right stage of development for them? Do you have the potential they’re looking for? If the answer to any of these questions is, “No” then you’re wasting each other’s time.

Point two: Are you the kind of entrepreneur investors want to bet on? The investor puts their trust in you. They place their reputation, not just money, into your hands. Do you have real integrity? Are your values in alignment with the investors’? Are you really really smart? Have you done it before (taken a startup through to completion)? How’s your work-ethic? Have you demonstrated passion for your current company by persevering through adversity? Are you fully committed? Do you recruit teammates that have these traits?

Point three: Relationship. Investors want to get to know you before entrusting you with their reputation and their money. This is even more true for angel investors, but also pertains to VC’s, who know that it might be a decade before they exit the investment. So expect them to want to get to know you well before embarking upon a decade-long journey with you.

Point four: Are you easy to do business with? Don’t negotiate things that don’t matter. Be accessible and return communications promptly. Be on time to meetings and arrive well-prepared. It’s surprising how many entrepreneurs think it’s OK to reschedule a meeting at the last minute. It’s not. That’s just disrespectful. Don’t make excuses; clean up your act.

Point five: We’re all human and therefore limited and flawed, investors and entrepreneurs alike. Do you learn from your mistakes? The alternative is to be destined to repeat them. Can you accept coaching thoughtfully, easily? Or do you demand that you make every mistake yourself? Investors want to help you succeed. They’ll do everything they can to help the business.

The next time you visit Las Vegas and wonder where the money comes from to build all those fancy hotels, remember that casinos are filled mostly with optimists and very few mathematicians. An optimist will read this blog and say, “Yes, that’s me. I have everything going for me that an investor wants.” A mathematician will only say that if investors are beating down his door with offers. If that’s not happening for you, then you owe it to yourself to take a harder look at yourself and start improving.