From the VC’s corner (27): Manage relations or go bust!
By: Ciprian Ghetau
Tags: Startup Lessons, Executive Coaching, Founder Stories, Relationships, Entrepreneurship

Illustration by Móni Munguia

As founder and CEO of an early-stage, VC-backed company, one of your key responsibilities is to manage the relations with your investor(s); not only with the major ones (lead investors), but also with that individual looking like a white dude with a beard drooling over the company’s potential to provide him with cash upon a future liquidity event (and yeah, you took his pre-seed money.)

Just as fundraising, managing relations takes time. Time well spent, as you need a well-functioning founders-investors team. When you generate success, everybody celebrates and it’s only smiles. However, when in crisis and critical situations, you (the founders) get what you sowed when you’ve picked your party round investors. Weathering the storm requires communicating in an open, honest and direct manner. Needless to say, hiding critical info or making things look better do not help.

While the process of due diligence has already created a detailed understanding between the parties, a mutual understanding is key to a long-lasting relationship. Apart from the monthly updates (on a set of KPIs) and regular board meetings, you may invite investors to join your office from time to time and participate in some of your daily routines. It’s even better if you grant investors access to a BI dashboard so they check (some of) your company’s KPIs real-time. All experienced investors have their own perspective on how to collaborate with founders; some don’t even want to get involved as frequently as others. Ask for their expectations in this respect.

Even when no financing round is in preparation, I recommend keeping potential investors (you’ve met and had some chemistry with) up to date regularly — easier if sending a quarterly update newsletter or when participating at regular startup events. Potential investors always look for markers of motivation / indications of motivation and passion, people who have shown conviction about something, including by blogging or showing evidence on GitHub. Additionally, demonstrate traction for your product / service. Partnerships, podcasts, newsletters, events, content marketing, etc., all have to convert into customers.

Ask yourself: how do we build a community / team that gives back? How do we start educating the customers while being as inclusive as possible? Giving opinions, thoughts, being real, speaking them in a way that resonates. Managing relations matters.

Definitely, founders work many hours, so take care of yourselves and be bullish to prioritize your time (Cat Noone’s time design.) This requires self-discipline.

If it’s the first time you pitch your startup to a large group of investors, avoid making mistakes so naive and embarrassing that nobody in the audience / panel wants to consider investing. “You need to be very articulate about your business model and the problems you’re trying to solve. And you need to be very articulate about how you’re going to solve them,” says Jean-Charles Samuelian, cofounder and CEO of Alan, a dynamic French healthtech (health insurance) startup with a distinct culture. And as soon as you set a communication bridge, manage the storytelling and capitalize on the moment.

Try to practice your storytelling, hire an exec coach, do drink a good amount of caffeine and always enjoy some workout at the gym!

My today’s preferred: Judy — prepare for what you can’t predict. “That last part — the educational content — is what Judy hopes will separate it from the competition; the company can help you prepare for emergencies depending on where you live in the world. If you go to the company’s website, there’s a nifty little tool that lets you enter your zip code to understand the natural disasters that could occur in your area, such as earthquakes, fires, floods and hurricanes. You can then download a corresponding plan to understand how to better prepare for unpredictable emergencies.”