Be a grownup.
Be a decent human being.
And build relationships long before you ask for money.
Those were the takeaways for young entrepreneurs Wednesday at a lunch-time event at the University of Waterloo called Raising Early Stage Capital, intended as a resource for early-stage companies as they work to gain a financial footing for their ideas. The event, at UW’s Humanities Theatre, was hosted by Velocity, the UW Student Venture Fund and the UW School of Accounting and Finance.
“You start building the relationship [with a potential investor] long before you’re ready to pitch,” said Jess Joss, CEO at Equation Angels, an alliance of three angel investing groups: Angel One in Burlington, GTAN in Waterloo Region and Southwestern Ontario Angels of London, Ont.
“I always hearken it back to dating: Treat people like people, treat them nicely and build a relationship.
“You don’t do a marriage proposal while you’re shaking hands [for the first time]. There’s a process and an evolution to it.”
Joss was one of seven panelists at the gathering, which was moderated by Tim Jackson, CEO and President of SHAD. Other panelists included former Dragon’s Den investor Bruce Croxon; Randall Howard, General Partner of venture capital and private equity firm VERDEXUS; Aaron Bast of the MaRS-affiliated Investment Accelerator Fund; Nancy Lala of Maple Leaf Angels; and Toronto-based investor and entrepreneur Ed Lycklama.
Joss said a common mistake she sees new co-founders make is rushing out of the gate, lusting after money, and failing to realize that an investment is a partnership. Yes, financials matter. Yes, the idea matters. But partnerships involve people. She recalled one entrepreneur who spent three years keeping in touch with her, updating her every three months on the evolution of his company.
“He did everything he said he was going to do,” said Joss. “I saw the integrity of the work.” She eventually invested in his company.
Croxon, formerly the CEO of Lavalife, one of the first internet dating sites, said investors want to know about the character of the founders they’re dealing with. He said the culture of the company that evolves from that character will play a role in his decision to invest – or not.
“Take the time to articulate the qualities that you think are going to be important in the people you surround yourself with and being maniacal about sticking to the screen that will allow you to choose the right people to partner with – because you can’t do it alone,” said Croxon.
Joss said she looks for five qualities in a founder or co-founder before she invests, qualities she called “the five H’s”: that they’re honest, hardworking, humble, that they have humour, and that they hustle.”
She stressed that it takes time to develop a relationship and an entrepreneur needs to be prepared to invest the time to do so:
“A common mistake? Connecting on LinkedIn [and] within seconds puking out your entire deck, asking somebody to invest and getting [my] gender wrong in the intro.
“It’s the sort of spray-and-pray scenario,” she added. “I mean, if I’m getting 10 of those a day, and I have no relationship with you, and you get my agenda wrong, and you call me Jeff? I mean, we’re really not off to a great start. And I think it really and truly is about building a relationship.”
Communitech is a partner of Startup HERE Toronto. This article originally appeared on their site.