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3 questions to identify a disrespectful diligence process
Is your diligence process disrespectful?
Today, I’ll introduce 3 questions to help you find out.
The Observer Express
Don’t have time to read the entire post right now? No worries, here are the main points:
Building a company is hard, and entrepreneurs deserve the utmost respect.
It’s easy for investors to lose sight of the importance of honoring founders.
3 questions to identify if a process may be unintentionally disrespectful to entrepreneurs.
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Entrepreneurship is So Easy Really Really Hard
Building a successful company is really, really, really hard. (Just ask Ben Horowitz, one of the most successful VCs in the world.)
Founders get told “no” all the time. They pour their blood, sweat, tears, personal and family health, and so much more into creating something where there was nothing. They realize the massive risk and acknowledge that it likely won’t work out.
Yet they still go for it, because they see and believe and are willing to bet their future on something that everyone else misses.
Whether we agree with their vision or not, whether we think they’ll be successful or not, and whether we like them or not, every founder deserves to be treated with the utmost respect.
I genuinely believe that most investors would agree with this perspective.
And Yet
I’ve seen so many investors lose sight of this focus. They ask for the world from an over-extended entrepreneur, take months (or even years) to finalize a decision, and fail to communicate with the applicant throughout the process.
I don’t believe this is intentional - I think it comes down to a lack of awareness and a lack of resources. Managing a well-oiled investment process is no walk in the park (that’s part of why I created Angel Ops).
But this reality eats away at the integrity of the investing organization and results in an experience that fails to treat the entrepreneur with the respect they are due. And the way people are treated gets around - if an investor community wishes to build and maintain strong industry relationships, treating all entrepreneurs (who, by the way, often launch multiple ventures and reapply for funding) with dignity and respect is non-negotiable.
So how can an investor community identify if their diligence process is disrespectful?
Ask these 3 Questions
Is your diligence process…
Organized? A well-organized, structured, and consistent diligence process communicates respect to an entrepreneur. A disorganized, haphazard, inconsistent process doesn’t.
Focused? The purpose of due diligence is to help a prospective investor make a decision. This diligence must be tailored to and focused on the topics that are relevant to the stage a company has progressed to and must focus on key factors that actually drive a decision.
Clear? Clarity is kindness. The best, most dialed-in diligence process is brutal if it’s not clearly communicated to an entrepreneur.
If the answer to any of these questions is “no”, it’s possible that some entrepreneurs feel some level of disrespect by your process, and there’s room to improve.
Final Thoughts
Over the last 2 years, I started a company at the age of 26 and personally interviewed hundreds of entrepreneurs on behalf of 5 different seed-stage investor communities. Those experiences have shown me firsthand that entrepreneurship is a hard, hard thing to do, and every individual crazy enough to launch a company deserves the utmost respect - especially from prospective investors.
What Do You Think?
Where do you see the greatest opportunity to more intentionally honor entrepreneurs?
Weekly Observations: 3 Lessons Learned
SOPs = Leverage🔧This week I spent a lot of time drafting and editing Standard Operating Procedures (SOPs) for several internal processes. It’s exhausting, but WOW I’ve been amazed by how quickly the leverage shows up. Now others can handle things I previously was responsible for easily, repeatably, and with quality. Life changing.
Growth is pain.🌱I recently heard a quote that stuck with me this week. “If you want to grow, expect to suffer.” It’s easy to coast, to enjoy the status quo. Changing, growing, improving, or developing something takes effort, sacrifice, and some measure of pain.
Warm leads are truly a gift. 🎁The kindest thing you can do for a growing company is think of them when you have a problem they might be able to solve. This week I was blessed to receive a few warm introductions, and it was fantastic.
Weekly Links: 3 Things I Found Interesting
Thanks for reading, have a great week.
-Andrew
If you enjoyed this post, please share it with a friend, colleague, or anyone else who may benefit.
P.S. - I recently finished creating The Angel Network Toolkit: 90 Resources for Cultivating a Thriving Community of Pre-Series B Investors, and I’m sharing it with anyone who refers a friend.
How did I do this week?
About Me
I cultivate flourishing.
I'm also the CEO of PitchFact, where our mission is to cultivate flourishing specifically through efficient and collaborative early-stage diligence. I'm a proud husband, grateful father, and honest friend. My love languages include brisket, bourbon, and espresso.