Investor Capital Beyond Money

Being an entrepreneur requires solving numerous distinct problems simultaneously. This can quickly overwhelm the entrepreneur and the leadership team of the start-up.

At such junctions, the team should not hesitate to turn to investors for advice & support. Seasoned investors have much more to offer than just money and the entrepreneurs must make more use of their investors.

How??

Like every parent has a favourite child, similarly investors have favourite portfolio companies. However, favouritism has little to do with support to others.

The key to getting more from the investors is communication.

• Communication drives more personality resonance vis-a-vis its absence.
• Mutual collaboration on growth motivation and drives, helps to improve investor relations, enabling the investor to go an extra mile to support.

When??

Communicate with investors:

• Regularly - Have communication milestone dates ( monthly / quarterly)
• During the highs and the lows
• Hits and misses
• Plans & actions

Consistency in communications is necessary.

This enables the investors to create a map of the company’s journey and supported by numbers, it enables investors to view the performance, lag, and potential objectively.

Objective view tenders advise and are followed by support which could create a large

impact on the business performance.

What??

In an informal Twitter poll (Source) revealed:

• 56% of the respondents stated their most common ask of their investors is for hiring help.
• 31% ask for introductions to potential partners or customers.
• 13% tap their investors for financial management advice.

Experienced investors have likely run into these issues many times over and can provide advice and support across domains of business like:

Hiring (especially for senior position and key managerial persons)

• Critique for job descriptions
• Posting job links on their websites and social media handles
• Referrals and warm introductions
• Invitations to recruiting events
• Diversification in an otherwise homogeneous & lesser than candidate experienced interview team
• Sell the business to prospective candidates

Marketing, Sales & Partnerships

• Introductions to potential customers and/or partners
• Invitations to expos, marketing and sales events
• Leverage social media presence
• Tapping into LP network
• Tapping into portfolio network
• Developing company and product story
• Drive engagement dialogues

Product development

• Investor’s experience, industry insights and objectivity could give a fresh perspective during product development
• Security and compliance are often overlooked, and investors can help the company avoid tripping up on regulatory issues

People

• Investors help with basic headcount and organizational growth plans (what roles to fill, how many, and when)
• Investors are not shy about telling if they think a key employee needs coaching or may not be delivering optimally in the organization.
• Investors can give insight around organisational culture
• Future fund raise
• Investor connects
• Legal, financial and regulatory compliances
• Preparing Investment Memorandum & Projections
• Advice on valuations and fund raise
•   Review of transaction documents

Conclusion

Many entrepreneurs wonder if asking for help is a signal of weakness!!

Conversely, investors want the leaders of their portfolio companies to be more transparent about challenges they are facing and seek help.

Entrepreneurs must drop their shields and ask for advice from the investors. They have already sold the investors on the business and have their money, now the two are on the same team and chasing a mutually shared mission – “To succeed”.

“Good entrepreneurs are learning machines, so they are always asking for advice and guidance from multiple sources of expertise, including their investors. In fact, the best founders are outstanding at squeezing every bit of insights, advice and contacts from their network of investors and advisors.”

- Jeff Bussgang, General Partner, Flybridge Capital