If you haven’t read my first blog in this series, which covers how to recognize polite rejections from investors, it will be helpful to do so before continuing on and learning how investors really evaluate you. Because many times, founders are measuring the success of the meeting on factors they may see as important, but investors may have other concerns.
When founders ask, “Why didn’t the investor invest?” they usually focus on the ending of the meeting. But that’s a mistake because investors rarely give a hard no. Instead, they offer polite, yet often misinterpreted rejections.
If you want to know how investors really evaluate you, pay attention to the questions they ask along the way. Never assume the most important signals are in the closing remarks.
Investors Reveal Concerns Through Questions
Because investors are trained not to argue with founders, they don’t want to debate vision or pick apart assumptions publicly. This means you’re not going to hear pushback or a hard no.
Instead, they probe. They don’t ask questions to get answers, but to see how you think.
Some examples of how this probing may play out in the form of questions:
- “How did you arrive at that timeline?”
- “Who exactly is the buyer here?”
- “What happens if incumbents respond?”
- “Why hasn’t someone else already done this successfully?”
These questions are diagnostic tools investors use to evaluate you.
How Investors are Really Evaluating You
While founders believe that they’re pitching a product or market, investors are evaluating something broader. They want to know if your startup will be a wise investment. They’re not looking to be impressed by your ideas.
Investors are really evaluating factors such as:
- CEO readiness. Do you sound like someone who has carried responsibility before?
- Decision-making maturity. Do you acknowledge tradeoffs?
- Risk literacy. Do you understand where this can break?
- Competitive realism. Do you see the world as it is, not as you wish it were?
As a founder, you can answer every question and assume you’ve impressed the investor. But you may fail the test because you don’t understand how investors really evaluate you.
The Difference Between Founder Answers and CEO Answers
A main issue in this misunderstanding is that founders often respond to investor questions with optimism, mistakenly believing this will show flexibility and drive.
Founders often respond with unsatisfying answers such as:
- “We’ll figure that out after the raise.”
- “That’s not really our focus yet.”
- “We haven’t seen much competition.”
To investors, those answers don’t signal flexibility. They signal inexperience.
But CEO-level answers acknowledge uncertainty and ownership:
- “Here’s what we know, here’s what we don’t, and here’s how we’ll decide.”
- “This is the tradeoff we’re making, and why.”
- “Here’s where competitors could hurt us, and how we plan to respond.”
The content matters less than the posture.
Why Meetings Feel Good but Go Nowhere
Many pitch meetings feel positive to founders because they are articulate, their ideas are interesting, and the investors seem to enjoy the discussion. But ideas are not enough and interest is not conviction.
If the logic doesn’t close or the leadership signal isn’t there, investors will quietly and politely disengage. Founders see this polite no, as a possible yes. All the while, they don’t realize they’re making a mistake by relying on friendliness to gauge how investors are really evaluating you.
How to Replay a Meeting Productively
Even with rejection, all is not lost. Once you’ve left a seemingly positive meeting there are some questions you can ask yourself to gauge how well you’ve done or how you can do better at your next meeting.
- Where did the investor linger?
- Which questions seemed unresolved?
- Where did I answer quickly instead of precisely?
- Where did I default to optimism?
Those answers will tell you far more than any follow-up email and you can use this honest self-evaluation to improve your approach.
In the third and final part of this series, I’ll go over what founders should do after an investor passes and tell you how to prepare differently for the next conversation. Make sure you sign up for my blog so you don’t miss it.
REMEMBER, INVESTORS DON’T FUND DECKS. THEY FUND FOUNDERS.My latest course will show you what investors DO want, so you can secure funding for your startup. Beyond the Deck is available now for just $29. Access it HERE.
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