Once you’ve sat through a good pitch, there’s often a bit of an awkward moment that follows.
The presenter – usually the founder or CEO of that startup – hopes that you’ll whip out your checkbook and invest on the spot. Typically, though, that’s not the case.
Investing in a startup is a big decision… one that calls for careful consideration and plenty of research.
But there’s a fine line between thorough deliberation, and needlessly dragging out the investment process. So how long is too long?
Everyone has their own opinion on this. For me, personally, it varies a lot. For example, if I’m hearing a pitch from a good friend, a business connection, or a really well-known entrepreneur, I might write a check within the first 10 minutes.
Heck, that’s what the legendary angel investors on Shark Tank do all the time. Recently, I sat down with America’s favorite shark, Robert Herjavec, to talk about how he does it.
Every great angel investor’s strategy is a little different. That’s why it’s so important to learn as much as you can from as many pros as possible. Robert and I talked for almost an hour about our personal angel investing strategies. And, while we were surprised at how much overlap there was, I think we each learned a lot from the other, too.
If you haven’t caught the recording of that presentation yet, just click here to catch a rebroadcast. I think you’ll take inspiration from it; not just from my approach to investing, but from Robert’s expertise too. After all, the guy makes multiple deals a day sometimes.
Sometimes, you just can’t wait to get in on a golden opportunity. More often, though, I think it’s important to sleep on it. That’s because the pitch is just the beginning of the decision-making process. See, while you should always do some level of research before meeting an entrepreneur, it’s after you hear a pitch that you’re likely to do your best due diligence.
You never really know what the big questions are – what holes you can poke in a business plan – until you’ve heard it explained in the pitch.
I also suggest taking some time to talk it over with other angel investors, your family and friends, and anyone you may know in a relevant field of expertise. The key is to get as many trusted perspectives as possible.
Personally, I like to take my time – usually a few days to a week – before I give an entrepreneur my “yes” or “no.” I’d rather write the check knowing I did everything I could to cover my bases and boost my batting average.
Plenty of angels make hasty investments because they’re terrified of missing out on a good deal. But here’s the thing: if you miss out on a deal or two, that’s okay. There are always more opportunities to make money as an angel investor. And, the more you participate in the community, the more you’ll find yourself sitting in pitch meetings.
At the same time, you don’t want to wait more than a week to give your final decision. Startup founders are some of the busiest people on the planet; they live a day-to-day hustle that necessitates some level of urgency. A reasonable maximum waiting period is about a week – long enough to get your ducks in a row, but not so long that the founders forget about your interest and move on to someone else.
My advice? Sleep on it. Take a few days if you need to. Don’t sweat the pressure, and don’t let an entrepreneur push you around. But don’t drag the process out forever.
Until next time,
August 13 2019