Have You Been Blacklisted By Investors

Some once hot founders can’t get a meeting with top quality investors. Want to know why? Well, many have been blackballed, blacklisted or they are wearing the scarlet letter. What does one do to get black listed?

In the last two months, I’ve taken meals with over ten well known VCs and Angel  Investors.  I’m not talking about folks like you and me but the real thing. People who I read about, admired from afar and am honored to know. I’m talking about some of the Made Men of DC.

One common thread in all those conversations has been a discussion of founders who pulled some bonehead move while out raising money. These founders crossed a line which has gotten them listed in the Founder Hall of Shame.

Investors have more good deals presented to them than they have money to invest. Most investors are looking for a reason to drop a candidate from their consideration for funding. Being black listed is once such reason.

Now it’s kind of crazy that someone would piss off an investor for any reason….  you may not need them  on the way up, but you’re going to need all the help you can get on the way down (Okay, so people right now are saying to themselves. but wait a minute Mr. Cranky, then why are you so harsh with some people? Well I’ll tell you that I’m intentionally burning my bridges because if at any time I accept any help from those folks, I’d rather be nailed to a cross. So I’m stepping on toes as anti- crucifixion insurance).

Investors share due diligence, they have long memories. Remember that while you’re raising money.

List of offenses that will put you on the investor black list:

  1. Following up with an email telling the investor they don’t get it or they’re idiots. Don’t laugh there are multiple cases of this.  A couple of you are reading this right now and recognize yourselves and if you don’t than you’re probably guilty of #4 too because I know what you did to whom!
  2. Pulling the rug out from under the investor because they aren’t moving fast enough or some other bogus reason.  Be like the NFL, if your clock is ticking, give investors the courtesy of a two minute warning. If an investor spends a lot of time getting acquainted with your deal and you don’t allow them to finish the process, you’re not likely to get a second chance to waste their time.
  3. Associating with and depending on sleazy, untrustworthy advisors.  When you lie down with dogs you get fleas. Investors want you to know the difference between people and dogs. Investors don’t want your fleas.
  4. Not being coachable. Never admitting you don’t know, that you made a mistake or arguing too stridently with a closed mind. Asking for a second chance while justifying your stupid actions that got you on the list in the first place.
  5. Coming into the process with the naïve inflexible belief that the money raiser sets the deal price and terms. This is an auction and the market sets the price and the terms. It’s a free market and both parties get to choose if they’re in or out. But please let the investor know that you’re not going to be realistic ahead of time so they can stop wasting their time with you.