HN Explorer

Ask HN: Can I tell investors, who procrastinate I need money NOW?

10 points by try_sincerely ↗ HN
I have a couple investors who said they want to invest and will send term-sheet. Now it drags for a couple months and really got to the point that their procrastination is hurting the company. Is it ok to tell them we need money NOW because burn-rate etc.? How else can I enforce a deadline for investment?

10 comments

[ 2.8 ms ] story [ 33.3 ms ] thread
nostrademons
You'll lose all negotiating leverage with those investors and possibly spook them into not investing.

The best way to get people to actually move is to create some competition. Seek out other investors, and when they're ready to invest, circle back to the original folks you were talking with and say "We've had some interest from other investors, and the round is closing NOW [or some short deadline like a week]. Do you want in or not?"

try_sincerely
Thank you! This part about "round closing NOW" always puzzled me. I understand there is a tradition to set deadlines like that - "raising NNN by YY", but what if the deadline comes and I don't have 100% of my round in? I set a new deadline?
debacle
You reassess the business and dust off your exit strategy.

If the investors already know what your runway looks like and they haven't given you a term sheet, they aren't going to be investing.

davidw
"The best way to get investment is to not need it", to paraphrase someone. So maybe work on making the company work rather than getting too desperate/needy.

I guess it's pretty easy to say that and a lot harder to actually do it though, so good luck!

jpeg_hero
Investor dragging feet on term sheet?

You probably told them a milestone within the range of stalling.

No near term milestones!

try_sincerely
Thank you, that actually may be one of the reasons.

But I met the milestone! With sweat and blood, many good people died as we were reaching that stone.

debacle
You can't. Your only real recourse is to deceive them into believing they may miss the opportunity, but that is a very, very bad and dangerous step to take.
akg_67
This is the reason you never stop raising until money shows up in your account. Forget about investors dragging their feet, focus on recruiting the new investors. Once you have the money from some investors in your account/check in hand, circle back with the other investors to see if they still want to join the round.
MalcolmDiggs
I see anything an investor does (outside of writing a check) as meaning "no". Dragging out a conversation for months, means "no". When an investor really wants to invest, nothing on heaven or earth will stop them from putting money in your hand.

I would just operate under the assumption that they're not interested, and raise money elsewhere.

S4M
You might want to read PG's essay about fund raising [0]. He advises to "hear no til you hear yes" amongst other things.

[0] paulgraham.com/fr.html