There are quite a few misconceptions entrepreneurs have about what to expect from investors. Hopefully we can help answer some of the burning questions you (and everyone else raising capital) seems to have.

You Need To Have Thick Skin

Not to start off on a bad foot, but we have to be realistic – most investors are going to tell you “no”.  It’s not because you don’t have a great idea, or that you’re a bad person.  The truth of the matter is that investors can only say “yes” to a very small number of deals.  Some investors will only make one investment per year.

It’s certainly in your best interest to talk to a dozen or more investors, not just one or two.  Having more investors not only gives you more options, but it also gives you more opportunities to get to “yes.”  Some entrepreneurs talk to nearly 100 investors before they find the right partner.  (Hopefully your number will be considerably smaller!)

An Investor Is "Not Interested" Until They Write A Check

This is a very common problem among entrepreneurs.  They’ll get an investor that continually says that she’s interested but hasn’t written a check.  While they’re sitting around waiting for that check to get written, valuable time is going by and their opportunity is slipping away.

Investors that are serious about making investments don’t forget to call you or follow up with you.  Serious investors that are interested in your deal will want to get the deal closed as soon as possible, for fear that some other investor will take the deal before they can.

If you’re unsure about whether or not an investor is serious, just ask yourself how close you are to getting a check.  Most experienced entrepreneurs will tell you that unless the check is signed and cashed, you still don’t have a serious investor!

Finding An Investment Takes Time

Many capital brokers – professionals who help companies raise capital for a living – will tell you that raising capital can typically take 3 – 9 months if you’re successful.  That may sound like an awfully long time when you are eager to get going, but there are good reasons for this.

The first reason is that it just takes time to find the right investors.  Using the Go BIG Network can significantly reduce the time it takes to find investors, but you still need to reach out and contact investors.  There are relationships that need to be built and trust that needs to be established before an investment can take place.

Even the best deal with the most experienced entrepreneur can take time to close due to the inherent steps in raising capital.  After an investor has expressed interest in doing a deal, both parties still need to come to terms on the value of the company, the terms of the deal, and the due diligence that is required by the investor.  All of these items take time.

Investors Don't Typically Sign NDA’s (Non-Disclosure Agreements)

Investors don’t typically sign non-disclosure agreements with entrepreneurs before hearing about their business ideas.  An investor will typically look at hundreds of deals per year.  Those deals often fall within their field of expertise, like the software industry or commercial land development. 

If an investor were to sign an NDA with you they could potentially create a legal liability with any deal they pursued after yours.  There is no guarantee that they will invest in your deal, so locking themselves out of other potential deals would be bad business.

In order to solve the NDA dilemma you should try to pitch as much of the idea as possible without giving away the secret sauce (if you have one) in the first meeting.  It’s generally held that if someone can simply hear your idea and replicate it without you, it’s not that strong of an idea. 

Here’s a good article written by Go BIG Founder Wil Schroter about protecting your idea that may provide some useful insight.

> Article: You Can’t Protect a Good Idea

If It Sounds "Too Good To Be True" - It Probably Is!

Serious investors will take their time to understand your business, conduct their due diligence on your company, and ask a fair number of hard questions.  If you find an investor that just seems absolutely gung-ho to invest in your company without reviewing any of this information in detail, you should be skeptical.

There are unscrupulous investors out there that will try to take advantage of unsuspecting entrepreneurs by trying to command “up front fees” for their services or play similar games.  This isn’t to suggest that anyone that charges a fee is unscrupulous but if you feel like something’s a little fishy, it’s probably best to walk away.  Save your time (and your money) for serious investors.

> Learn more about avoiding Scams and Fraud