Investors have a fear of missing out like everyone else. For them, it’s specifically having the opportunity to invest in a company, choosing not to invest and then having that company go on to be very successful. The pain of not making an investment and having it become successful is much stronger than the joy from investments they did make and became successful.
The best way to engineer investor FOMO is to (1) be working on an important problem, (2) have evidence (ie. traction) that people want what you're building and (3) have a compelling vision of how the world is better if you're successful.
Assuming you're doing that, founders can get a little more leverage by doing the following.
Talk to 40+ Investors
Most founders simply don’t talk to enough investors. It’s hard to create FOMO between investors if you only talk to 5 or 10. We tell Iterative companies that they haven’t really started fundraising unless they’ve talked to 20+ investors and should aim for 40+. The most successful Iterative companies talk to 70+.
Maximize Meeting Density
In addition to talking to 40+ investors, talk to as many of them as you can in the shortest amount of time possible. Doing this will increase the probability of interest from an investor in a short time frame which you can then use as leverage to push the other investors to act.
Leverage Investor Interest on Other Investors
If you're making progress data room, (ie. you're presenting to multiple partners, they're asking for a data room, etc.) with 1 or 2 investors, politely email the other investors to let them know your fundraise process is progressing to the next stage and that you would still like them to be a part of that process. Ask them what the next step is and if there's anything you can do to help with it. Investors might start dropping out but in all honesty, they probably weren't that serious about investing any way. The goal is to separate those that are serious from those that are not so you can focus on those that are.
Remember that for an investor, (1) making an investment takes a considerable amount of work, (2) they’re talking to a lot of companies and (3) the longer they wait the more desperate you’ll become (burn rates are real yo). A fear of missing out is an effective way drive them to prioritize working on a decision for your company.
If an investor thinks they’ll miss out on investing in a company that will be successful, that fear will propel them to act. That’s when the tables turn in your favor.
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