Delivering on investor expectations means setting your relationship up for success
Know your investor
You will learn a lot about your investors through the fundraising stage and if you planned your investor approach, you will have identified investors who
fit with your venture and your team.
The fundraising stage lays the foundation for a relationship built on trust, so be open and honest with your new investors, particularly when you’re discussing risk and challenges.
It’s a good idea to conduct a strategic partnership or investor review prior to progressing too far with each investor – dollars are vital but you also need alignment with values,
goals and vision.
Set expectations with your investors
Your roadmaps, forecasts and strategies are only part of the expectations you set with your investors. The way you work together, the flow of information and the performance of the venture are all important.
Investors have chosen to invest in you and your venture and as you negotiate terms, shareholders’ agreements and governance structures, you’re also negotiating the expectations of your investors. Be clear on deal-breakers, get to know theirs, identify areas in which you and they might compromise.
This is a relationship that will be a rollercoaster ride sometimes; remember that you’re in this for the ‘long-haul’ and that your success is intrinsically linked.
What to communicate and how to communicate it
Your KPIs are set, you have your critical path and milestones mapped out and you’ve agreed a regular meeting and update schedule with your investors – great work!
Here’s the thing – investors need to know more than what’s going well.
The best policy is to be open – that means the good, the bad and the ugly. The good you keep doing, you maximise and leverage the momentum, make good great. The bad you need to discuss – the cause, the impact, the solutions…don’t forget the solutions! Don’t be tempted to keep bad news from your investors. When you’re upfront about the bad, action can be taken to avoid it becoming ugly… and if things do turn ugly, you want your investors
in there with you, not against you.
As with everything you do as a startup, be solutions focussed.
How to discuss future funding
Investors in very early stage ventures expect further rounds of funding – generally startups need seed for MVP, scaleups need series A & B for growth. As you achieve your milestones and work through your roadmaps, your future funding discussions should be relatively straight forward. If you’re not achieving your milestones but are burning through the cash, your conversations need to be more sensitive and tend to be more frank. No investor wants a venture to come back to the table in the short term for more funding when the value hasn’t been delivered from their initial funding.
You’ll have ups and downs, your challenges may make you pivot – make sure that you keep an eye on your cashflow, that you’re spending money in the right places and that you can demonstrate you’re creating value. Above all, be honest with your investors.