The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question, “What’s the worst thing you can say to a potential investor?” is written by Ken Staut, co-founder and CEO of GrowthFountain.
Investors are a skittish group. After all, as an entrepreneur seeking capital, you’re asking them to take a leap of faith, which tends to go against human psychology: Humans tend not to be first movers or contrarian investors. We like to follow the crowd. We want to see social confirmation and validation to give us comfort that we’re making the right decision. It’s almost unbearably uncomfortable for us to go against the grain.
Keep this in mind as you speak to your potential investors. You’ll want to keep them all aligned toward funding your dream, so you’ve got to be delicate. Carefully choose your words and contemplate your actions to soothe their concerns and keep them focused on the potential return.
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If I had to distill the worst thing you could say to this skittish group, I think it would be two words: “Trust me.” You’re trying to get this group to take a leap of faith. You’re sharing with them the assumptions that make your model work. You’re describing an opportunity that may not even exist in the marketplace, so you’re encouraging them to use their imagination as you describe the potential market for your product or service.
Investors want to be told a good story. They want your business to be the next big idea, and they often want to share their ideas and provide you with new strategies. The trail on which you’re embarking likely hasn’t yet been forged. Or, if it has, there are still many forks in the road and many decisions to be made, and it’s still likely heavily overgrown. They want their leader to have humility—not to act like he or she has all of the answers. They want their leader to put a good team together—a team that feels free and welcome to brainstorm and share ideas—where they can pivot as needed and redirect their efforts toward a path that works better.
The challenge is to show your investors a strong sense of confidence and the tenacity to make it through any tests that await—but to not appear as a know-it-all. Investors tend to invest in the team first and the idea second. You will inevitably face failed assumptions and insurmountable walls throughout your maze to success—but this is quite normal. That’s the concept of pivoting toward a slightly (or sometimes completely) tweaked product or service. They want to know the team is cohesive, humble, smart, and tenacious enough to steward the ship through the storm.