In the world between founders and investors, both sides should always be mindful of their interpersonal behaviors — especially being aware if the origin of each relationship is outbound, inbound, or mutually developed.
In a situation where one experiences inbound interest, that person is often at an advantage and can bend the rules a bit in his or her favor. Flipped around, when going outbound to generate interest, that person often has to be extra accommodating to give themselves a chance at making a connection. When there’s lots of inbound interest, it’s easy to tilt the game in one’s favor, to get better terms, to control the ball and the clock; when one has to go outbound, usually that control and tilt shifts to the target.
Despite this common sense, I still see lots of folks who are going outbound act as if they have inbound interest.
I see this on both sides, for investors and founders. This usually becomes most apparent in the transition from angel/seed capital to the land of institutional venture capital. In seed, there’s so much money, rounds happen so fast, terms are really generous — but then all of a sudden, folks are doing well, and looking for $2M+ lead checks, often more, and they have to shift from the “abundance of inbound” in seed to the “realities of outbound” for the next round. On the investor side, I see many instances where folks just assume deals will come to them because they have money and a big office. Nope. Some funds are so far off the radar of today’s founders, they’d be shocked if someone conducted a thorough brand audit.
In short, I see inbound attitudes against the background of outbound realities.
I feel it because I live it. When I go out to raise my funds, even though they’re small, every single interaction is outbound. I have no inbound. As a result, I need to bend my schedule and attention to be outbound. It’s a big step to go from a few families and high net-worth backers to someone cutting a bigger check. It takes time. And it should. For some managers and funds that have made it, that carry huge brands, they’ll always have inbound — but the overwhelming majority, like in startups, have to generate their own outbound — not just for fundraising, but for recruiting, business partnerships, public relations, and so forth. Fundraising is talked about the most, but it’s just a proxy for how one may handle everything else. As a result of this dynamic (and, to each his/her own, of course), I always try to remind myself to not be fooled into thinking I can generate the inbound, but to rather let humility drive the outbound.