This content was created by Tim Draper. This content was uploaded by Tim Draper. This is a YouTube video titled "Approaching Investors | Andy Tang" (posted Nov 17, 2017). The excerpt is a recorded conversation/Q&A in which Andy Tang advises founders on approaching and communicating with investors. Key points include honoring verbal commitments, being transparent when sharing bad news while presenting solutions, building personal credibility by teaching investors something new, strategies for initiating relationships with new investors, and balancing a big vision with concrete first-year/month-one milestones (vision vs. MVP and demonstrating team execution). Participants in the excerpt are Andy Tang and an interlocutor labeled "Speaker B."
Chapters
Okay, so I'll take— I'll strike— I'll knock down a few easy ones. Keep your word, right? This is even in our oath. Whatever you tell people verbally, make sure you honor, right? It's part of building that credibility. It's what makes communication more efficient, okay? We talked about being transparent, right? So if you could— your ability to share bad news is very important. Because that builds trust, right? Okay. So what is the best way to share about you? Tell— share all the facts, don't try to hold back, right? Share all the facts, but you might, as a good CEO and founder, you may want to filter find the silver lining or the good things that could come out of it.
So cool.
And never give a problem without a solution. And this advice is not just for startup, this is a— if you work for a big company, you never go to your boss and say, excuse me, boss, we just lost our biggest customer. If I were the boss, I'm thinking, well, why are you telling me this, right? Because your job is to get the customer. So you better have an alternative, a backup plan. Well, but boss, I got 3 more customers in the pipeline we're going to work on. That's great. Go get busy because I'm busy too, right? That's a perfect way to share bad news. Mr. Investor, we're running out of money. Why are you telling me this? Oh, but we have 3 investors we're talking to that we might get financing. Great. let me know if I could participate in the next round. So the key is to be transparent, but also have a solution when you come to talk to whoever you're talking to. Yep, please.
Especially when you're getting to a new investor, like you know about him but he doesn't, but he has like no idea that you exist, like how do you start that relationship with me? Like what should be your first meal which would attract their attention?
Great question. Investors you don't know, how do you build rapport? So I don't want to generalize, but most people who are in the investment business have this natural curiosity to learn about new things, right? And I think that sort of trait, makes them more, or us, more open-minded and uncover sort of new things. So I think learning is an important way of building rapport. If you come in and teach me about something I don't know, right, I feel like I've learned. I also feel like you're pretty knowledgeable, you're pretty smart, right?
Right.
So in the first session, sort of developing this, Personal credibility, it goes back to personal credibility. You're knowledgeable, right? And I personally benefited from it. I didn't feel like, ah man, I wasted half an hour listening to this pitch. I already know everything he talked about. Nothing new, no insights. Because if I— if you sit through a meeting, if I sit through a meeting and I don't learn anything, it tells me this opportunity is not new. If it's not new, I would have done it before. The only scenario where that could be helpful is this team is such a rockstar team, right, they told me about an opportunity that I already knew, it's obvious, but I just didn't have this group of people to execute that. So I would invest in that. It actually does happen. In fact, I'm working on a project Now it's an obvious opportunity, but it's the first time I saw, oh, this is like a really good team. You didn't teach me anything new, but I did find this team I want to back. But those are the sort of cases where you get lucky, so you can't count on that, you need a strategy.
So like my main question was like, so when you're starting a relationship with them, the first thing— Like the very first thing that you do is mail them something. So like what should be the right content, how much information you should share with them?
Yeah, so there are 2 things to keep in mind. One is, it actually goes back to the market size and team. So one thing is to get people to see your vision and excited about the the scale of the impact, like how big this gets, not just dollars but the impact, right? The second is now you get them sort of excited about how big this can get, the next question I'm going to ask is can this guy do it, right? So you have to strike a balance and you need both, the end vision versus the first-year deliverable, the milestone that you can hit, like we know you can execute. What are you going to do at the end of year 1, or even month 1, and how you're going to get it done? Does that make sense? So strike the balance, we're going to change internet with blockchain, completely revamp internet, and the first thing we're going to do is this. And we need your support to do just the first step.
So like when you're pitching this, Aren't you supposed to pitch your vision rather than your MVP?
Just pitching vision is not enough, right? Because all you proved to me is that it's a big market, how do I know how you're going to do it and how do I know if you could do it? It goes back to those 2 things. So if you don't pitch— some people make the mistake of not pitching the vision and just sort of focus on what you can do, then I would look at this and say, oh, this looks too small. Yep? Okay, good. So you're saying that the
