How do I close an investor who has shown interest in my startup?

I had discussions with 2 entrepreneurs who have received angel investor interest thanks to Angel List. They are doing well, getting traction and starting to get interest from potential seed stage investors. The question they had for me was to learn the art of the close. Much as I dislike the word closing a deal, I think its important to achieve the important milestone of completing a round of funding.

First its important to realize that most folks (nearly 95%) of investors do not whip out a check in the first meeting. They may make their decision within the first few minutes, but after that, its the delicate dance.

There are 2 primary strategies that I use to help move the funding round to closure.

First, build the relationship beyond the first meeting. The technique I use is “drip marketing”. Every so often after meeting with them I would send them an email (either every other day or once a week for 2-3 weeks) giving them an update one some progress in the business. The first email would be about a new customer win, the next about some potential partnership or a new press mention, etc. Usually most entrepreneurs send one follow up email and if they receive no response they stop.

I would actually send 2-3 emails and keep sending them an update until they say they’d like no more updates.

The second strategy to get their help or advice on opening a door at one of their portfolio companies. This could work against you if you cant close that opportunity, but usually they appreciate the fact that you followed up. This helps them understand your ability to follow through.

The final strategy takes more time and helps you more than them. I put together an operating plan. An operating plan comprises of 7 unique and distinct plans, each of which cover an aspect of your business – sales, marketing, engineering, hiring, finance, product roadmap and partnership plans. This plan has to document your assumptions as well so you can then have them help you validate those assumptions.

Here is my original BuzzGain operating plan (incomplete) from 2009.

You might think this is a lot of work, just to get their money after they “agreed” to give you money with a verbal commitment, but trust me this works you get things moving faster than if you did not use any or all of these strategies.
Try it and let me know if it does not work.
There is a method and template to each of your 7 areas, but we’ll cover that in a separate post.
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6 thoughts on “How do I close an investor who has shown interest in my startup?”

  1. Thanks for sharing Mukund. It is a great strategy…sending the operational plan + drip marketing once an investor expresses interest. The operational plan that gets sent needs to be rock solid. If not it can open up more questions and introduce doubt.

  2. Throw in competition (legit of course) and create deadlines…communicating all this subtly. And watch how fast it moves.

    1. The idea is that the entrepreneur should keep working on his business while raising funds and involve investors in the process (as you mentioned, ask for opinion, connection, etc). This can also be a good way to figure out if you resonate with your investor. Throwing in competition almost never works unless it originates from the investor end.

  3. You might consider not using that ‘of’ after ‘comprises’. Though this mistake is so common that some dictionaries are now listing ‘comprises of’ and putting a note in the usage section saying that this has become very common. But as far as authentic English grammar is concerned using that ‘of’ after ‘comprises’ is still considered incorrect.

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