Setting expectations when fundraising

Whenever I meet a new founder who’s raising money for their startup, after hearing their pitch I immediately outline three things:

• I explain each step of my due diligence process and timeline

• I share the parameters for how I assess a potential investment along with what, if any, additional information or resources I need

• I share my initial impressions of the company, product, team, and market

I believe one key to being an effective Angel Investor is to set expectations as soon as possible and provide honest feedback.

Why?

Because that’s what founders deserve. They deserve to know what they’re getting into before embarking on this strange courtship that is the fundraising process. They deserve transparency.

After all, if you’re an Angel Investor, your ability to be transparent is actually one of your greatest advantages.

Larger funds don’t have that same luxury for one simple reason: The ones interfacing with founders usually aren’t the actual decision makers. An Associate may excitedly fast-track a founder through the diligence process as a result of their own personal excitement but, at the end of the day, it’s the GPs and sometimes LPs that make the final investment decision.

In the end, the job of an investor is to empower the founders they work with. That’s why honesty and transparency are crucial.