Different Ways to Scare Investors Away

Whether you are trying to borrow money from a colleague or land the financial backing of a venture capitalist, there are some traits that can scare investors away. It can be hard to find startup funds so if you have an interested investor you should do everything you can to entice him or her to cut you a check.

There are a few major things a business owner can do that will send prospective investors running for the hills instead of reaching for their checkbooks.

Giving a poor pitch

You need to put together a great presentation to attract investors. You might need to write and fine tune your pitch dozens of times. Because of the revisions, the likelihood of making mistakes increases. When you are giving your presentation, you might make a change on the slideshow, but forget to make the changes on the hard copies you give out to everyone. It is easy to overlook something like this so be sure to pay attention to these small details, it can come across as sloppy and scare the investor.

Being dishonest or secretive

One of the fastest ways to shut down an investment deal is to be dishonest. The more open you are, the more your investor will trust you and your judgment. Don’t try to over-inflate your connections or your success rate—just be honest.

Also do not keep any secrets. Full disclosure is the best way to keep the relationship with your investor healthy and productive. Investors understand that opportunities are improved through the exchange of ideas, so discuss everything from your business model to potential customers. When you are being secretive a red flag is raised. Uncertainty equal risk, and investors want to reduce risk to improve odds of success.

Acting like you are a know-it-all

While investors want you to be an expert in your market, they don’t expect you to be an expert in everything. More so, most businesses must adapt to changing market conditions over time, and entrepreneurs who feel they know everything generally don’t fare well.

If you are seeking funding, acknowledge investors’ experiences. Let them know that while you are an expert in your market, you will seek their ideas and advice in marketing, sales, hiring, product development and other areas needed to grow your business.

Failing to respect competitors

Many times, companies tell investors that they do not have any competitors. This scares investors as they think if there are no competitors, a market does not really exist. Every business has competitors, including direct and indirect. Direct competitors offer the same product or service to the same customers. Indirect competitors offer a similar product to the same customers or the same product to different customers.

Come across as “uncoachable”

Do not expect investors to give you cash and then check back in later in the year. Investors have a stake in your success so expect a relationship to form. The investor wants a say in how money is spent. Be open to ideas and willing to take the advice of your investor.

Investors will shy away from entrepreneurs who are interested in investor’s cash and unreceptive to investor guidance and input. This because they are interested in helping entrepreneurs be successful and desire to play a role in that success.

Showing ignorance of your customer base

Do not underestimate how hard it can be to attract customers. You want to show your knowledge and experience in the industry, but do not act like you have got customers knocking down your door. You will scare investors away.

Do your homework instead and know everything there is to know about your target audience. Lazy entrepreneurs skip the necessary research into identifying their target customers’ characteristics and buying habits. Companies that do not know their customers are unlikely to succeed.