This week's tip: the four tips to help you understand an overcome founder-investor-fit.

No matter how hard you try, you will always get rejections as a founder.

But that’s not as bad as it sounds.

In fact, it’s a major part of fundraising and something that will always happen.

Whilst sometimes it’s due to your industry or business model. A lot of the time its purely because you don’t fit with that investor.

Today I’m introducing four simple tips to help you understanding founder-investor-fit and what to do with that knowledge.

Let’s dive in.

What is Founder-Investor-Fit?

Founder-Investor-Fit refers to the compatibility and alignment between a startup founder and an investor.

It goes beyond the financial aspect of what your opportunity is, but also around your shared values, working relationship and goals.

For investors, they want to invest into the best founders of course.

But also want to invest into the founders that they cannot wait to work with.

By having proper founder-invest-fit, the likelihood of a successful partnership increases tenfold, as both parties are aligned in their approach and have a mutual understanding of the business. This alignment often leads to better decision-making, effective communication, and a shared commitment to the long-term goals of the company.

And remember, this is a decade long journey. If that investor doesn’t want to work with you after a 30minute call? They’ll never want to invest into you.

Here are four practical ways, with some real-world scenarios of Founder-Investor-Fit:

Tip #1: Find Your Perfect Investor

Example - you think you aced the call but the investor just didn’t get what you were doing. You are sad because of another rejection.

Instead, you should realise that sometimes the investor will never get what you are doing. They won’t have the right interests in your market, or lack the knowledge to really get why your opportunity can be so good.

That’s okay - this happens, a lot. But what else can you do?

Focus on finding out what your perfect investor would look like.

Seriously, sit down and think about what they would have to know, what markets they would be interested by, and how they would think. Only then can you know what kind of investor you are looking for.

When you have this type of investor you can start to be more tactical on how you reach the right investors, instead of just looking at a database and hoping for the best. Maybe its going direct to them, maybe it’s focusing on domain experts, or maybe its going to or creating the right events with the right people to find who you need to find.

But without knowing who would want to invest into you, it’s so much harder to find them.

Tip #2: Meet As Many Investors As Possible

When I meet with founders, I often ask them the same questions. One of those questions is, "how many investors have you spoken to?"

I find that 99% of the founders who fail to fundraise have only spoken to 10-20 investors at most.

Fundraising, at its core, is a numbers game. You need to meet as many people as possible until you find the right investor for your business.

You can't rely on luck to receive a term sheet from the 20th investor you meet. I wish it was like that, but it isn’t.

That’s why I talk about how important it is to build the right relationships, and do the right preparation before a fundraise. Without it, you’ll never meet enough investors to find the right ones.

Tip #3: Focus On Your Relationship With Them

At the end of the day, failing to establish a founder-investor fit often boils down to the investor simply not liking you.

Sometimes, this can be attributed to personality clashes, but more often than not, it's because you haven't devoted enough time to building a relationship.

During my time as an investor, I encountered numerous instances where founders would fall short in this aspect. We would hop on a call or have a meeting, and there would be no small talk whatsoever. The first 3-5 minutes of meeting the founder was awkward, even if I made an effort. They would stumble through the conversation, not acknowledging my attempts to be friendly, and immediately jump into their pitch once everything was ready.

As a result, I had no understanding of who they were as a person, which made it difficult for me to determine if I actually liked them, even if their pitch was good.

This would always lead to doubts in my mind.

If you find yourself failing in introductory meetings, pay attention to what those first 3-5 minutes look like:

• Are you being friendly?
• Are you building a connection?
• Do you have anything in common?

Sometimes, founders would often continue to exhibit the same behaviour even after that initial meeting.

They would be cold with follow-ups and treat our interactions as purely professional. Again, it felt awkward, and I would question what it would be like to work with them if we were to invest.

I would ask myself things like, "Do I genuinely want to work with this person for the next 7-10 years?" or "If something goes wrong (which it inevitably will!), will this person be honest with me?"

Many times, I couldn't get past these questions, and it would lead me to reject the founder.

Tip #4: Fundraise For More Than Just Money

From my years of being an investor and now advisor I see a big problem with founders being transactional.

Your fundraise is not about the money. It never has been, and never will be.

Like I always repeat: this is a potentially decade long journey.

So you need to make sure you are fundraising for more than just the money.

Investors can feel when you just want their money and not a working relationship.

It instantly feels off to them and makes them less likely to trust you.

When you focus less on the money, but rather on if the investor is the right fit for you, it does 4 things:

1. You can test who is good enough for you
2. You come across as in control and confident
3. The investor believes you have more options
4. The investor knows you are in this for the right reasons

These are all important things that makes both sides have an easier time of seeing if there is founder-investor-fit. If you go in with the mindset of ‘money, money, money’ you’ll never have that chance.

Your Journey, Your Rules

Fundraising is a wild experience that comes with unique challenges, no doubt.

But remember this: a lot of the time, getting rejected is less about you, and more about the founder-investor-fit.

Some rejections are about focusing on what you did right, what you did wrong, and what kind of investor fits perfectly for you.

I hope these little tips will help you navigate how you think about founder-investor-fit. And maybe they’re the push you need to rejig your fundraise.

If you want, we focus a major part of my new cohort-based course around this.