Investor Commitments vs Reality

Realism and skepticism are often found in entrepreneurs, founders, and syndicators, but not when it comes to raising capital.

“We’re about to close the fund, and we wanted to get your recommendations on raising the rest…” (this is how a couple of my meetings start each week…)

I said, “Great – tell me how much you’ve raised thus far?”

Now, this is where it gets interesting. Because they respond with “$8.5MM out of $10MM.” “So it looks like you’re almost there. Why do you need help?” I asked.

“We’re just waiting on a few others to fulfill their commitment, and in the meantime…”

I interrupt, “Wait, so how much have you received in your bank account from qualified investors?”

“Only $2.4MM, but the rest is coming. I’m sure of it because we have commitments…”

Don’t Bank on Investor Commitments

As I peel this guy back further, it’s easy to see that he has mistaken kindness for investor interest or an inquiry as a commitment.

While investors may politely respond to outreach, express openness to learning more, or even commit to “taking a look,” too often, this surface-level engagement fails to translate into genuine, substantive interest.

Too many want to boast about the number of commitments. That’s like bragging about how many 45lb plates will fit on the bar versus how much you can actually squat.

There exists a vast chasm between an investor’s noncommittal niceties and their warm embrace of a potential deal. Simply saying “I’ll take a look” or clicking on a promotion for more information does not equate to legitimate enthusiasm about an opportunity.

The problem stems from the sheer volume of deals and solicitations investors face daily. Friends and business associates are quick to respond to your query with “Sure, I’ll take a look” or a polite “thanks for sending, I’ll look it over” becomes the path of least resistance, an easy way to clear the inbox and kick the can down the road.

A Prospective Investor’s Request for More Information is Not a Commitment.

Matt Scott

Investors often genuinely intend to look over materials when making these small commitments. However, the reality is that research shows the majority of investor interests sadly equate to a platitude.

Real interest isn’t expressed through one-off replies but through initiated follow-ups, detailed questioning, and a systematic application process that requires investors to complete an additional step to express their real interest.

Anything less may simply be conversational courtesy rather than substantive enthusiasm.

While it’s understandably exciting when an investor agrees to hear your pitch, email, or text you their interest and how much they would possibly invest, this is far from a firm commitment.

By implementing additional steps and qualification procedures, you can avoid the devastation of misplaced hope and wasted efforts.

I’ve found some potential clients are afraid of adding qualification systems to ensure the investor is committed so they end up with unfilled commitments and scramble to raise capital.

When implemented correctly with the right frame – investor will follow your process and you can close the gap between commitments and capital received.

Matt Scott
Matt Scott
Matt Scott is a seasoned expert in the private capital markets, specializing in raising funds from accredited investors. With over two decades of experience in starting, capitalizing, operating, and exiting private companies, he guides entrepreneurs through the intricate landscape of private capital raising. Leveraging proprietary processes and systems, Matt and his team have successfully facilitated over $1 billion in capital raises for their clients. At 7x, Matt and his team provide comprehensive execution and back-office support, tailoring strategic systems to meet the unique needs of each entrepreneur on their journey to secure private capital. Their client base spans the United States, Canada, Dubai, Israel, Finland, and Central America, underscoring their global reach and expertise.