Kim Lisa TaylorSecurities Attorney, Founder, Syndication Attorneys, PLLC · Corporate Securities Attorney, 2x Best-Selling Author, Nationwide Speaker | Private Placement

The Risk of Relying on a Single Investor 💸

16 Aug 2024 · 1 min

Watch on YouTube

0:50

In this YouTube monologue, the speaker warns entrepreneurs about the danger of depending on a single prospective investor. He explains that seasoned investors typically wait until founders have completed five or six deals before committing, and they often avoid outright rejection, instead stringing founders along. While founders invest significant resources—due‑diligence costs, legal fees, and deposits—waiting for that one investor, the majority of the time (90‑95%) the investor never materializes. The speaker illustrates the risk with a concrete case where a $400,000 investor failed to appear at closing after the team had already spent roughly $100,000 preparing the deal.

Chapters

So the people that are the most successful don't spend any time talking to those people. In fact, they won't even invest with you until you get to 5 or 6 deals done start to finish. And what happens is a lot of times they're too polite to say, no, you don't have enough experience. So they'll string you along and you'll be putting all your hopes on that one person, you know, furthering the deal, pouring money in for due diligence, for our legal fees, for your deposits and all of that. And you're waiting on that one person and 90% of the time, maybe even 95% of the time, they don't come through. Worst case scenario was a client that had a $400,000 investor that didn't show up at the closing table after they'd probably spent $100,000 getting that deal that far.