GoKawiilOpinions expressed by Entrepreneur contributors are their own.
Listen to this post
Key Takeaways The fastest way to lose support from investors is to hide the challenges you face along the startup process. Credibility is not built by perfection, but through clarity.
The leaders that people trust are the ones who treat disclosure like a habit and not like a negotiation tactic. They set a real plan, communicate it clearly and stay honest about where they are on that path. They understand that people are afraid of surprises, not difficulties. Fundraising is no different.
I once sold a home in Las Vegas, and the required disclosure of everything that was wrong with the house ran 52 pages. I had to put myself in the buyers’ shoes when they came to view the house. I went as far as documenting where the ants come in when it rains because I did not want them to sue me. That is what disclosure looks like when you are serious about trust. Fundraising is no different.
The fastest way to lose support is to hide obstacles. Credibility is not built by perfection, but through clarity. The leaders that people trust are the ones who treat disclosure like a habit and not like a negotiation tactic.
When you are not transparent, people find out
I cannot emphasize transparency enough, especially with early-stage investors. If they understand your obstacles and you are honest, it has been my experience that the investor is rooting for you, especially if they are interested in the mission.
But entrepreneurs do something that is completely backwards. They think the way to earn support is to make everything sound smooth. They talk like nothing is wrong. Then the first obstacle hits, and everyone realizes the story was carefully edited — either it was not true or it was incomplete. When you are not transparent, people find out.
The truth is, the people in your company are pioneers with you. If you want them to support you through the hurdles in the beginning, you must let them see the full picture — both the good and the bad.
... continue reading