The business world has a fascinating set of unspoken rules and constructs related to what’s considered proper “meeting etiquette” during a first meeting with someone. For example, if you’re visiting someone’s office for a first meeting, the host will almost always offer a drink, and you’re almost always expected to decline. Why does the host feel obligated to offer a drink? And why should the visitor feel obligated to decline it? I have no idea. But it’s a norm for first meetings, and most of us follow it without much thought, just as we do during countless other social interactions.
Of the many unspoken rules of first meetings that most of us blindly adhere to, the most absurd of them all is probably the strict adherence to whatever minimum allotted time was set when initially scheduling. If a meeting is scheduled for 30 minutes, it’ll last at least 30 minutes. If it’s scheduled for an hour, it’ll last at least an hour. If it’s scheduled for 14 hours, 26 minutes, and 32 seconds, it’ll last for at least 14 hours, 26 minutes, and 32 seconds. Yes, if the meeting is particularly good, it might go longer, but it won’t end more than a minute or two early no matter how obvious it is that the meeting is a complete waste of time.
The reason first meetings don’t end early is probably as simple as people not wanting to seem like jerks to someone they’ve only just met. Sure, after the first five minutes they could be thinking, “This is utterly useless,” but they’re not going to say that aloud. Instead, they’ll grin and make whatever small talk is necessary until they reach the end of the scheduled meeting time.
While I realize I’m not going to convince anyone to change this behavior with a silly little article, I’m highlighting the issue because of the problems it creates for entrepreneurs when they’re fundraising.
All halfway decent investors can size up a company and decide whether or not they might be interested in investing within the first five minutes of meeting its founder. In the cases where they know the meeting isn’t going to lead anywhere, they could — and probably should — acknowledge their lack of interest as soon as possible, but they don’t. Instead, they adhere to the same unspoken rule about not ending first meetings early as everyone else, they grin politely, and they make casual small talk until time is up.
The problem with following this norm during a fundraising meeting is that casual small talk to fill time at the ends of meetings between entrepreneurs and investors is never about harmless things like sports, movies, or the weather. Instead, the small talk is about the entrepreneur’s startup, which is a topic that sends a confusing message to entrepreneurs by making them think the investors are more interested in their companies than they actually are. As a result, they leave meetings with disinterested investors thinking they’ve got a chance at raising capital, and they waste lots of time continuing to pursue those investors even though they’re never going to invest.
To avoid the problem, entrepreneurs have to learn to understand the kinds of questions investors ask when they’re making small talk while trying to kill time until the end of a meeting.
Since every investor and every startup is different, nobody can prepare entrepreneurs for the exact questions investors will ask them when they’re not interested in a startup. However, during my years of fundraising, I noticed a pattern related to the kinds of questions investors asked about my companies when they were just killing time. I can easily share those patterns here because they almost always fall into one of the following three categories:
Entrepreneurs love thinking and talking about their products. Investors know this, so they understand that the easiest way to casually chat with a founder is by asking product questions. For example, they’ll ask to see demos, they’ll ask about feature roadmaps, or — my personal favorite — they’ll start imagining additional features along with founders.
“What if you added something like this…” they’ll say, and the founder will respond with, “I love that idea. Yeah! And it could also do something like this…” The founder and investor proceed to spend the next however-many-minutes brainstorming random features together, the time passes quickly, the meeting ends, and everyone happily moves along to whatever they had scheduled next.
The problem with this type of conversation is that founders completely misread what took place. While investors walk away from these conversations knowing they’re not interested in investing, founders interpret the investors as having said, “If you build the features we discussed, I’d want to give you money.”
Trust me — that’s not what the conversation meant. Investors who are genuinely interested in investing in a company won’t brainstorm features because investors don’t care about products; they care about businesses. If they’re not talking with you about your business, they’re not interested in your company.
Since I’ve explained that investors are focused on business questions, an investor asking about competitors might seem like someone interested in investing. After all, competition relates to business, right?
Wrong! Or rather, discussing your competition is mostly irrelevant in a fundraising context.
To appreciate why a detailed discussion about competitors is irrelevant, you have to understand that any mildly decent investor is going to understand your market and your competition significantly better than you. After all, understanding markets is a huge portion of an investor’s job. Because of this, if you’ve pitched your company properly, investors are going to know where your venture fits within a market without you having to tell them.
To be fair, most investors will want you to demonstrate some level of knowledge about the layout of your market and competitors, but that’s hardly worth any significant time. If you’ve addressed it properly for 30 seconds in your pitch, you should have covered enough of what needs to be said. Any long-ish conversation is overkill and a sign of an investor who’s just trying to reach a meeting’s end.
The last types of questions investors ask when they’re not interested in startups are hypothetical questions. These types of questions are the most obvious sign a meeting isn’t going anywhere useful because hypothetical questions aren’t productive. They’re just interesting thought exercises that don’t provide any tangible or actionable information about the potential outcome of an investment (i.e. an investor’s entire purpose for meeting with a founder). Quite honestly, once you start getting hypothetical questions from an investor you’re meeting with, you should figure out a way to gracefully end the meeting because, at that point, you’re just wasting your time.
Examples of hypothetical questions include investors asking things like, “What’s going to stop Google from seeing your idea and copying it?”
The investor might as well have just asked, “What would you do if an asteroid is 24 hours away from smashing into the earth?” In other words, you’re being asked to discuss highly unlikely, doomsday scenarios that aren’t worth a moment of your thought. At that point, the investor isn’t trying to learn anything valuable. The person is literally just trying to get to the end of the meeting. Do yourself — and the investor — a favor by proactively ending the conversation.
If you ever do decide to break protocol and end a meeting early, or even when you’re simply fielding any of the other types of questions I’ve described and know the investor isn’t interested, just remember to be polite. After all, investors aren’t wrong for not being interested in your startup. You’re the person who messed up. Maybe you didn’t do a good job vetting an investor before reaching out. Maybe you don’t have enough traction. Maybe you’ve got a terrible startup.
Whatever the case, don’t let a failed fundraising meeting be a complete waste of time. If you focus on figuring out why the investor wasn’t interested, I guarantee you’ll have learned something important that’s going to help you during future fundraising efforts.