The 3-Hour Wire: How Investors Should Close

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Some investors commit to a startup, then take forever to send the money. I wrapped up my biggest investment ever in just 3 hours and 14 minutes:

11:14am: SAFE and wiring instructions received

2:28pm: SAFE signed, wire sent

Too Many Investors Leave Founders Hanging

I’ve seen investors take weeks or even months to wire. One investment of mine waited 2 months for $150,000 an investor promised.

This is one of the worst screwups an investor can make.

If you don’t want to commit to a company, don’t! But once you’re committed, you need to follow through ASAP.

How to Close An Investment Properly

Take my latest check. It’s not that I did all my research in just 3 hours.

I had already done my diligence and decided I wanted to put in a check. Once I had the documents, it was just a matter of going through them, signing, and setting up the wire.

There’s no reason this should take more than a few hours.

The Dirty Little Secret About Some VC’s: They’re Broke

One reason investors take forever to send the money: they don’t have it.

Some newer funds will commit to investments, then go try to raise the cash. This is a bait and switch that no investor should ever do to a founder.

I once saw a European-based syndicate commit to lead a pre-seed round. But they didn’t have the money and never succeeded in raising it.

They had to pull out, leaving the company wounded.

If you say you’re in, be in. It shouldn’t be contingent on raising the money later.

If you’re a new investor looking to make a name for yourself, this is the exact wrong way to do it.

Practical Advice for Founders

If you’re a founder, ask investors how long it takes them to sign and wire. Ask for specifics on their latest investment.

If they’re leading your round, you need to do even more diligence. Talk to several of the founders they’re invested in.

Did this VC actually follow through in a timely manner?

It’s a lot easier to do this diligence now than find out the hard way later.

Wrap-Up

The best founders have tons of options.

If you have a good reputation, they might be willing to deal with you. If you don’t, you’ll get ghosted.

So when you commit, follow through right away. No more than 24 hours.

If you can do that, you have a shot at working with the best founders in the world.

The 3-Hour Wire: How Investors Should Close

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