investors, angel-investorsI met an investor two weeks ago, at that time I asked him for € X,000 for X percent.
In the meantime, I collected some neat quotes about my product and ten big companies signed up for my future beta (even though the beta’s far away, I did get them to signup).
I’ll meet him soon, is it ok to ask for more than the first time we met ?
E.g. : Ask him for € 2X,000 euro still for X percent?
Is this a common thing (to change the figures from one appointment to the other) or will he feel cheated ?
Validation creates value. So your idea to ask for more money makes great logical sense, as long as there’s something very solid behind the beta sign-ups. (Solid in this context is probably going to mean the same as “sufficient evidence of engagement to provide forecastable revenue.” If it isn’t solid, you haven’t got validation - certainly not validation worth 2X.)
So much for logic. However, two weeks is a very short time. Thinking relationally, there’s a real chance you will cause offence, unless the meeting was pretty casual, or your discussion pointed the way to this likelihood (for instance if you based your prior valuation on some metrics that you can legitimately revise upward).
All in all, I think it may be better all round to view your next meeting as a progress report against the deal already discussed. If you’re already turning ambitions in the pitch into achievements, from the investor’s point of view you are starting to look credible, a better risk that rival pitches that aren’t making progress pre-funding, and perhaps a deal they should do.
I think I’d rather have a happy investor who wants to back me, than the reputation of someone who thinks the world has changed every time we meet.
The quick answer is Yes. Wouldn’t you feel cheated if you were promised a price, and it suddenly doubled?
That being said, if the value of your company truly went up, then its understandable that the shares in a company also gained value. This happens in business, and your investor should understand that.
Remember that when dealing with people perception is more important than facts. Even if you increased your company’s value, if he doesn’t see that, then he’ll feel cheated. Here’s a couple ideas on how to help your investor to see your company as you do:
Show to your investor where the company started. Show him how you brought it up from nothing, and how you built the entire structure. This will help him to see how much work you have already put into the company, or your personal investment.
Outline for your investor what is happening in the company. Tell him about the companies that have signed up with you, and explain how you were able to get them to sign up. Tell him how they will use them, and how it will benefit those companies.
Lastly show your investor where your company is headed. Share your plans on how you will grow the company, and where you see it 5, 10 and 15 years in the future. He needs to know that you are organized, and that his investment will bring forth fruit. Help him to understand how it will pay off for him.
This doesn’t have to be a long speech, but can be done in 5 min. if you want. let the investor be your guide. If he doesn’t care, neither should you. If he wants to know more, give him every detail. After you’ve explained these things to him, tell him why you think you deserve more money per share. Don’t say you just think its worth more. The investor is taking a risk on you. He doesn’t know if it will pay off. Tell him how the additional funds will be used, whether its that you need additional help with the infrastructure (servers, computers etc.), or to get additional help (hiring an employee, buying software, etc.). Tell him that because of the recent expansion to multiple large corporations you will need the additional money to help to keep up.
Your investor will likely push back, and thats understandable. Remember, he is helping you. No matter what happens, Don’t get angry. Remain calm and collected. If he offers you a price you feel is to low, tell him that you can’t do with that much. He will probably part with more money than he wants, and you’ll probably get less than you need, but thats business. Its better to get one dollar when you needed two than to get nothing.
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