A mistake we’ve seen founders make is accepting commitments too quickly from investors. This may feel counterintuitive – after all, getting investment commitments from investors is the whole point of fundraising, right?

Here’s the thing. Being slow to accept can actually give you more leverage and allow you to extract more value out of your investors than just capital. BTW, the article below is a summary from our recent episode of Uncapped Notes. If you prefer to watch, you can do that right here.

What happens when you tell investors to hold their horses?

After receiving a verbal commit from an investor, we recommend two strategic moves:

• First, thank them for having conviction in your company.
• Second, tell them that you are still figuring out what the final allocations would be for your current fundraise, and it would be helpful for them to fill out a form indicating what their interest is.  

You might be wondering what that form would look like. Don’t worry – we’ve got you. Capture the basics like their name, email address, and amount they want to commit. Additional information like whether they’re an angel, family office or VC is optional but OK. But one of the most important fields you can include on your form touches on the “beyond capital” component by asking how the investor can add value to your existing team.

This crucial question accomplishes two things:

• It forces them to sell why they deserve to be on your cap table, shifting the power back into your (the founder’s) hands just a little bit.
• It sets a sort of social contract between the investor and founder on what the investor is expected to do after the investment.

That last point is important

This last point is vital because you want to have a relationship with your investor where they are also an advisor or unblocker on certain activities.

So, for example, it’s not ideal to have a cap table of investors who are only good at engineering. Instead, it would be nice to select investors who represent a diversity of expertise. Maybe include some marketers, people managers, etc. so you can rely on these folks to provide mental models and networks for these areas of your company.  

Of course, you won’t always have an oversubscribed round where you can pick and choose who to let in. But even if you don’t have many choices, going slower on the closing process by having people fill out a form like this is key because a good investor should bring expertise and value beyond money.

Remember, investor relationships are long-term. It will take a minimum of seven to 10 years to get to an IPO. While it is tempting to take the money and run, slowing your roll to assess the investor you’ll be partnering with for several years is a smarter move for you and your startup.