I was reminded of the importance of never looking ‘desperate for funding’ when I recently met with a couple of friends who happen to be seasoned Angel Investors. Between them they have invested in more startups than I have had weekends off, so they think and look long and hard before making an investment, no matter how good the investor presentation.
The Angels were discussing a Cloud services startup they had been recently pitched by and were considering jointly investing in. What interested me was the fact their keenness to invest was significantly influenced by the knowledge that the startup was in advanced discussions with other Angel Investors and the entrepreneurs seemed confident they would soon be funded.
Now, while I am sure that neither of these Angels would make an investment based solely on the fact that another Angel was interested, it was equally clear to me that being courted or in discussions with other Angels increased the chances of this startup being funded by my friends.
This reminded me of how, decades ago in High School, I would become more interested in a girl when I knew she was interested in another guy. Do we never grow out of that one?
So, while an entrepreneur should never mislead an investor they are pitching (credibility and integrity are essential to raising investment) subtly and carefully letting it be known to Investor A that you are genuinely in discussions with Investor B, may increase your chances of being funded by investor A. Be warned, however, play it wrong and you may find yourself being told to go back to Investor B.