Lesson 3: Investor Personalities

Investor Personalities & Personas: Beginning to Understand your Audience and What They Need

Like most things, investors can be categorized. They have personality types that will help you understand how to interact with them a lot easier. The five major personality types include: The Gambler, The Analyst, The Cheerleader, The Bull, and The Operator. 

There are others, but they’re mostly subsets, and we’ve found that it’s better to stay with the main ones. Here is a quick breakdown of what each personality entails. 

● The Gambler – Takes many bets, a small one early and then again when success is inevitable. This one won’t be of use beyond some capital. 

● The Analyst – Will spot all the flaws in your pitch and business model, ignoring the fact you’re a start-up. They care about the financial models and see rounding as sloppy. This person is better suited to late-stage companies, and that makes them useful in preparing for a future round. 

● The Cheerleader – Supportive, but not much use in running your company or helping with the strategy. 

● The Bull – Will push you past your limits, though you might break. They think they’re better than you, so they’ll be a pain to work with. For M&A negotiations, you may want one of these on your side. 

● The Operator – This is the “been there, done that” investor. Tons of experience that can help you unless they aren’t in your sector. They can still be useful for general company building advice since that is more universal. 

Investors are human, and like each human, they are unique and common at the same time. All people can be categorized, but most cut across categories. Get to understand who you’re talking to, and you’ll be able to move forward easier, and with your eyes wide open. Depending on the investor type, change how you’ll communicate, but not necessarily what you’ll communicate. 

Hustle vs Grit

With raising money, many people talk about hustle. That makes sense if you’re talking about working hard and being always on the go. But grit goes further than hustle ever will. Having grit means that you can take on all the challenges that come with raising capital, but there’s much more to it than that. You need to communicate to investors you have grit. 

A start-up journey is full of hardship and challenges. Investors need to know that you can get through it. You already know failure in your past is a positive trait. Bouncing back from a failure and even grabbing success from the clutches of failure shows a lot of inner strength. All the operational ability in the world won’t save a company whose leader folds when things get hard. 

Showing grit is something you will have to learn to show on your own, but when you introduce yourself to investors, don’t build yourself up as an infallible demi-god. Show them you know how to learn from your mistakes, get up when you fall, and persevere in the face of adversity. That also helps keep your ego in check. Confidence is good, but arrogance will rub people the wrong way. 

Grit is something every entrepreneur should have. However, there are quirks specific to different entrepreneurs. Just like investors have personalities, so do entrepreneurs. This is part of understanding yourself. The main entrepreneurs include: 

● The Innovator – Builds something brand new and sometimes disruptive, but this takes a lot of capital and time. 

● The Hustler – Has a vision and works crazy hard to make it happen but owning their vision so much means they’re less likely to see the value of raising capital. 

● The Imitator – Improves on something that exists, which has the potential to be easier. But you start from behind and are always compared to the original. 

● Researcher – Learns and analyses so much that they become a high-level expert in all aspects. This takes time, and researchers tend to be more risk-averse, which can be tough in a venture. 

● The Buyer – Buys an existing business, usually at a premium. The buyer has the money to do this, but is that really the entrepreneur we have been talking about? 

Pros and Cons

There are benefits and downsides associated with each. It isn’t about picking the best; it is about figuring out which one you are. You might overlap across a few of the types. Know who you are, so you can maximize your strengths and minimize your weaknesses. 

You’re an entrepreneur and you probably have entrepreneur friends. One of the biggest pieces of advice we can give you might sound terrible to some of you, but you should take it. 

There is no better way to improve and grow than to surround yourself with a great pack. Make sure that the members of your pack are better than you because that will help pull you upwards. Founders that raise successfully hang out in groups of founders that raise. This occurs naturally because people like to hang out with peers. 

Think of it like chess. If you played chess with a bunch of people just like you, you’d probably win some games and lose others, but you wouldn’t learn much, so you wouldn’t get any better at the game. However, if you played with a bunch of grandmasters, you may lose a lot, but you’d learn, and eventually get better. Maybe becoming a grandmaster, yourself. 

We’ve given talks in front of groups of entrepreneurs, and when asked of who has successfully raised large amounts, the hands that went up were usually all at the same table. Lots of things play into this. One thing is that the network is effective because they help each other, but sometimes the adage that “birds of a feather flock together” is just true. Maybe they knew each other before they raised, and they all just happened to successfully raise money. They didn’t create a winner’s group. They had the qualities of winners and then was in a group when they all won. While this is possible, it’s highly unlikely. 

That advice might sound problematic to some of you, but surrounding yourself with high performers is one of the easiest ways to get a level in “badass” for whatever you’re doing. It happens in schools all over the country. In fact, the best athletes hang out together, practice together, and get better together. The best students hang out together, study together, and get smarter together, ruining the curve for everyone. There are lots of real-world examples of this being true, so make getting a pack a priority. 

Another benefit is that it puts you in a mode of constant development and improvement. Conversation and dialogue among a group of highly competent individuals raises the competency of all of them, or put another way, a group of smart people get smarter faster by hanging together. This is especially true in the context of investors. Surrounding yourself with investors whose backgrounds and personas not just align with yours but also have much to teach you is a wise move because they will add more value to your company. 

There’s a benefit to mentoring and teaching those in your pack. It helps them learn, and it helps you develop. But I am talking about your leisure time. When I hang out with my friends, we talk about business topics for fun. It’s that leisurely conversation that adds value to and from your pack; you’re developing even while you’re having fun and relaxing. There’s always more benefit to be had from partnering with investors who can offer you mentorship and coaching. As you embark on the journey of looking for investors, always keep in mind the personalities you will face and what that audience needs from you.