Too often entrepreneurs take the cash and get going on their business and forget to engage with their investors. Before you know it, six months has passed and there has been very little communication between the entrepreneur and his or her investors. This can lay the groundwork for future problems.
So after you’ve got an investment from and Angel what then? Too often entrepreneurs take the cash and get going on their business and forget to stay engaged with their investors. The investors are part of the problem too because they live busy lives and other things come along to district them. But before you know it, six months has pressed, and there’s been very little communication between the entrepreneur and his or her investors. That’s a shame, and it also lays the groundwork for future problems because invariably the company doesn’t go according to plan. It’s very rare for a company to shoot up and to the right. There are almost always problems. And when these problems come as a surprise to an investor, it’s a real disappointment, and undercuts the relationship. Well, your opportunity after the investment is to maintain really robust communication with your investors, and that means being proactive with information about your company. That’s especially hard when things aren’t going well, but also especially useful. By doing that kind of communication, your investors are going to be informed about what’s going on, and any unfortunate surprises are going to be attenuated by the fact that they heard them as soon as possible, as soon as they happened. You’d be surprised how often it is that we investors will invest in a deal, the company will more or less go silent, and the next time we hear about them is only when they need more money or when they’re about to fail. Often, companies do need more money, and by being robust in your communication, even if things aren’t going well, investors are going to be more amenable to writing you another check to help you out because you all feel like you’re on the same team. So trust me, I know that you’re going to be extraordinarily busy, and be pulled seven ways from Sunday. But make sure you budget time every week to communicate with your investors.
Investors will often suggest that you add to your board of directors a representative of the investor group. A board of directors is a legal entity that is nominally the CEO’s boss. Having such a board can be very helpful in providing someone for you to report to and to help keep you honest. But it’s also an entity to which you are beholden, and to some degree you have given up some control of your company. That’s something to be very cognizant of. Who you have on your board should really be thoughtfully considered because these are people you’re going to be interacting with on a regular basis and who have a real ability to affect your company’s behavior. So you want to be sure the chemistry is right, and that everyone is aligned about the goals that the company’s working towards.
Patel, Neil. “The Entrepreneur’s Ultimate Tip List for Communicating with Investors.” Entrepreneur. Article. August 3, 2015.
Shah, Dharmesh. “The Why and How of Updating Your Angel Investors.” On Startups. Blog post. May 20, 2013.
Wilson, Fred. “Anxious Investors.” AVC. Blog post. July 26, 2015.
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Questions for You
What is my communication protocol with my investor/s?
How often should I check in with my investors?
If I’m going to add an investor to my board of directors, which one makes the most sense for my company and our needs?
Questions for Your Team
Will the investor/s need to hear from any of the team outside of the founders?