📺 Stream EntrepreneurTV for Free 📺

When Seeking Funding, Beware of 'Happy Ears' Startup founders should be sure they're hearing what investors are actually saying.

By Alex Iskold

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

David Cohen, co-founder of Techstars, has a ton of amazing advice for founders. One of my favorite bits from him is about "happy ears."

What's that, you ask?

It is what most founders have when they are talking to investors. Instead of hearing what the investor is actually saying, founders hear what they want to hear. Instead of "no," they hear "maybe," instead of "mabye?" they hear "yes!"

Related: 5 Steps to Identifying Potential Investors That Are Right for You

When an angel investor says he or she is interested, it doesn't mean he or she is in. Interest does not equal commitment.

So how do you get from interest to commitment? First, you need to explicitly ask for investment and clarify the conditions. That is, you ask the investor what conditions need to be in place for a commitment.

Then, you need to confirm that you heard the investor correctly. David Cohen teaches founders to do so called reflective listening. This is a simple communication technique where the founder says/writes back to the investor what they understood was agreed on.

Reflective listening avoids misunderstandings.

Being on the same page with the investors and having clarity is better than running around with happy ears and ending up disappointed.

Related: 5 Qualities Angel Investors Want in Founders

Alex Iskold

Entrepreneur, Investor, Managing Director of Techstars in NYC

Alex Iskold is the managing director of Techstars in New York City. Previously Iskold was founder/CEO of GetGlue (acquired by i.tv), founder/CEO of Information Laboratory (acquired by IBM) and chief architect at DataSynapse (acquired by TIBCO). An engineer by training, Iskold has deep passion and appreciation for startups, digital products and elegant code. He likes running, yoga, complex systems, Murakami books and red wine -- not necessarily in that order and not necessarily all together. He actively blogs about startups and venture capital at http://alexiskold.net.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Social Media

How To Start a Youtube Channel: Step-by-Step Guide

YouTube can be a valuable way to grow your audience. If you're ready to create content, read more about starting a business YouTube Channel.

Money & Finance

12 Books That Self-Made Millionaires Swear By

The bookshelves of millionaires can inspire you to build your wealth. Here are 12 must-reads they recommend.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Devices

Stay Focused and Accessible with These $40 Conduction Headphones

These headphones sit on top of your ears, so you can take calls while staying tuned into your surroundings.

Green Entrepreneur®

A Deer Invasion in Hawaii Has Turned Into an Environmental Crisis—And a Sustainable Business Opportunity

How Maui Nui Venison built a for-profit harvesting business that protects the land and helps the local community.

Devices

Keep the Office Cool This Summer with $10 Off a Klima Thermostat

The Klima Smart Thermostat can turn your existing mini split, heat pump, or AC into a smart unit.