I seem to have reached that point in my life where I spend my mornings working, looking for investments for Users Proof, and my evenings looking for something quite different…that special someone who I could spend the rest of my life with. Believe me, when I say, neither of these is easy! When I found myself researching both topics, I discovered something interesting. In almost every investment article I read I come to a point where they say:
“Working in investments is a lot like dating”
Huh? I couldn’t figure out how people had come to this conclusion, so I decided to make my own comparison. Confession time: I’m not exactly an experienced Casanova – in fact, I’ve never really dated in my life! – but I knew enough to do what any smart engineer would do. That’s right, I Googled “how to date”, which led me to an awesome wikihow page complete with a step by step manual. Talk about dating for dummies!
So let’s get started…
Being Your Best
Everyone agrees that confidence is a real turn-on. Of course, there’s a big difference between confidence and arrogance, and if you don’t recognize that, your date could end in disaster!
It’s the same in investment. Entrepreneurs and investors must show confidence, grace, humility, and understanding.
Eman (entrepreneur) thinks that there are a number of actions where investors can really show confidence. For example, they could demonstrate that they are at peace with the fact that they are not aware of all the technical details of the products startups are building.
Dima (senior venture associate) believes that confident entrepreneurs are the ones who accept feedback without getting offended. Investors want startups to be successful, and sometimes that means constructive criticism!
Dating and investment require confidence, grace, humility, and understanding
All my research led me to the golden rule of dating: don’t pretend to be someone you’re not. Sure, you’ll get attention when your profile claims that you’re a well-travelled heart surgeon who can dance salsa, but what will happen when your potential partner discovers that you’ve never been further than the next town, you faint at the sight of blood, and your rhythmic talents are limited to playing Just Dance sometimes?
The same is true in investment. Eman told me an anecdote about investors who promised to close an investment deal within 2 – 3 months. They sounded super confident and well connected. But in reality, after wasting a lot of time, nothing happened. They got as far as a signed term sheet, but nothing more.
Entrepreneurs get disappointed when they do not get the promises they had from investors delivered.
So how can you tell if your investor is the real deal, or if they’re just disguising themselves beneath a thick layer of makeup? Eman thinks that you should look at how other investors are treating them. Exactly like dating, you can make a proper judgment once you’ve seen their friends. Dig around and see what kind of promises they’ve delivered in the past.
According to Dima, actions speak louder than words. The entrepreneur should reference check the investor like you would when hiring a team member; you need to know their work ethic and you will have to work with them so others’ experience with the investor matters
Startups should ask for feedback, ask questions, and engage.
Dima told me that a huge part of her job is managing expectations. When she arranges a meeting between a startup and an investor, entrepreneurs often enter with high hopes, but they may be left disappointed when the investor doesn’t get back to them.
Dating and investment ask you to be genuine.
Getting to know her on a deeper level
Let her get comfortable
If you want a second date, then you need to make sure that your partner is comfortable! Ask a lot of questions and make sure to listen. Your questions should be meaningful, too – don’t ask a guy, “What are you thinking of?” when he’s silent. The chances are he’s not thinking of anything!)
In investment, there should be lots of questions, lots of feedback, lots of empathy and exchanging of ideas.
Dima told me to get comfortable and have a transparent discussion with investors, most investors want to help and share input. Be open to ideas and listen so that everyone in the room gets comfortable.
Startups hate when investors tell them what to do as if investors know everything.
Investors get very uncomfortable when startups neglect their feedback and become defensive of their point of views.
Dating and investment must be based on honesty
Being a good date
Put effort on your first date
Location, location, location! You don’t need to spend a fortune on your date, but you ought to take the girl to a special place that both of you can enjoy. Do you really want to have a romantic meal with your future wife over a Big Mac, or in a crowded club where you have to shout to be heard?
Eman thinks that the best place to pitch a startup is a meeting in her office or in the investor’s office. Just like in dating, location is an important way to set expectations.
Events, conferences, parties, or similar kind of events are not effective according to Eman.
Dima spends time reviewing pitch decks, going through the startup’s website, checking the profiles of the founders, and compiling a list of questions before she meets any startup.
The first meeting is always about understanding, Dima thinks.
Dating and investment takes effort
Don’t get too nervous
In dating, being nervous is a definite path to disaster! Don’t worry about the structure of the date, and focus instead on having a good time.
The same thing goes for investment meetings. Personally, I think many startups feel pushed to please investors. They want to look perfect, with a flawless pitch and a memorized sequence of slides.
In my opinion, both investors and entrepreneurs must have a good time where they discuss the details of the business rather than focusing on the structure of the presentation.
Enjoy your time showing your startup
Being too nervous could hurt your investment and dating, just be comfortable
Call her when you say you will
In dating, if you promise to call or follow-up, just do that. Nobody wants to sit by the phone for hours on end waiting desperately for it to ring…
Unfortunately, investors often don’t follow up or even send an apology letter. This is not only poor manners, but it leaves the startups confused and unsure of how to proceed.
After 400 pitches, Eman only got one regret email. It made her feel horrible because all those meetings were a waste of time that left her disappointed.
Dima seconded what Eman said. A simple email with “I am not interested” is enough.
Send a regret letter if you do not want to invest, tell the startup why.
Dating and investment require you to be reliable
Introduce her to your friends
As the song goes, “If you wanna be my lover, you’ve got to get with my friends.” This is key in getting to know someone better!
In investments, is it a clever idea to introduce a startup or an investor to other startups and investors?
Some startups could be conservative about introducing other startups to investors because they are concerned that the investor will be poached. But Eman believes that this is actually the smartest thing to do. You can get a lot of feedback on the investor based on how they treat different startups.
Get feedback about any potential investor by asking other startups, especially their portfolio companies
Dating and investment require you to get feedback from peers and friends
Phew! Well, it looks like investments and dating have a lot in common. Let’s be honest – any human interaction is governed by the same rules. Investors and entrepreneurs are human, with emotions and personal biases, just like the people you’ll meet on your quest for true love. Just try not to confuse the two situations – remember, stick to a handshake in the boardroom!
In the next blog post, I will share with you how to use empathy maps to understand your wife/date/investor.
I wrote another post, where I discuss the usage of empathy maps to understand investors.
Mohammad is the founder of Users Proof. he is keen on helping companies increase their sales through better UX design and testing