5 Ways to Handle Investor Objections
Investor objections are a common hurdle to overcome for startups. Here are five ways to handle them!
1 – Preemptively address investor objections
While it may seem counter-intuitive, the best way to handle investor objections is to preemptively address them. Think about what the objections could be, things like having a solo founder, too many founders, an unfinished product, being in the idea stage, or having an idea in an industry that is currently suffering. Then work on answering that objection before it comes up.
Spend 15 seconds talking about the industry and 45 seconds dispelling the potential objection as you talk.
2 – Point them to data
For example, say you have a startup in an industry that isn’t currently fairing well due to the COVID-19 pandemic. You can point the potential investor back to the trends after the financial crisis of 2008 to show that industries affected by crisis bounce back over time.
3 – Use a sales approach
Handle investor objections with a sales process approach. Treat the situation as though you are selling to them rather than giving an elevator pitch. This reframes the discussion as a conversation where both parties are communicating, rather than a single-sided bid for an opportunity.
4 – Point them back to what you’ve said
Countering objections before they materialize allows you to not only show that you’ve already considered the objection, but are confident as to why it is not a problem. This ensures that all you have to do once your initial sales pitch is over is point them back to your thorough understanding and treatment of the concern.
5 – Limit back and forth
Try to limit back and forth as much as possible. Since you’ve already handled objections, if one comes up in the ensuing conversation, simply point the investor back to what you previously said. You’ll want this to serve as a deterrent for the investor to bring it up again. You don’t want them to feel stupid, you want to feel as though you’ve thought of everything and they are in safe hands.
Working with investors can be daunting, but knowing how to psychologically navigate negotiations can set you up for success!