It’s Ok to Admit You Don’t Know
By Makenzie Gagne ’24 Associate
Ask questions, make mistakes and learn from them, and continue being curious.
Entrepreneurs have a tall task during funding rounds of impressing investors, judges from competitions, and the public. Hours of practice and years of cultivating ideas put entrepreneurs in a state of confidence and excitement. With this comes a fatal flaw.
Inc. noted in an article that overconfident founders “thinking they know it all” is one of the most unattractive features investors look out for. The entrepreneur has thought of the idea, created the product, and done the research necessary for them to believe they will succeed. Naturally, these people can assume they know the most. However, overextending themselves into niches and fields that are not in their skill sets can be a recipe for disaster.
Overconfidence bias is when a person overexaggerates their abilities and overestimates their knowledge of a subject. There is always a possibility of investors taking what is said during a pitch, and being receptive, believing the founder without confirming research. This is why concrete due diligence is such a hot commodity in the investment decision process. Today, investors’ due diligence processes are more robust than ever and avoid possible red flags, including overconfident founders. With this being said, knowing what you don’t know can be a valuable asset.
Entrepreneurs: please, advocate for what you do know, and find resources to fill in what you don’t. Create positions within your company, or take on mentors that specialize in the subject that can expand your venture’s horizons. With this, understanding which parts of the business need help can show investors where their investment will be used, as well as a sense of understanding of where your company will develop.
It’s ok to be open about the mistakes you’ve made, and express where your knowledge lacks. Having a sense of transparency and self-awareness will attract the investments the founders are looking for.
Makenzie is a junior from Londonderry, NH with a dual major in Finance and Sustainability. This is her third semester in the Fund. Throughout her time with the fund thus far, she has dedicated time to work with associates on integrating sustainability into our due diligence analysis. One of her favorite takeaways from her experience with Rines has been working among talented peers to gain firsthand experience and knowledge of private equity investments. On campus, she is actively involved with Alpha Kappa Psi, the professional business fraternity, The Sustainability Fellowship, and and the Rutman Leadership Fellowship.