Collecting capital is an inevitable step for almost every startup founder – unless you are building a company that is profitable from the first day. However, a large increase is associated with great responsibility – not only for capital itself, but also for maintaining solid relations of investors. This includes clear, transparent communication, because in a different way you risk being greater than an observer, watching your idea comes alive or falls apart without you.
History is repeated too often so that we do not learn her lesson: the curtain requires Jack DorseyThe battle from the conference room, which led to the departure Steve JobsAnd – how could we forget? -a food based on investors Jerry Yang With Peasant.
Such cases are countless; You can fill them in the whole book. But can you are taking control of such subjective things? Well, at least you possibly can try. Here’s how.
The investor counts, not the fund
If you do not want to get began right after a raise, take home work. Too many founders flexibly, which the fund supported them – “I gathered Andreessen Horowitz“I have General catalyst,” Or “Redwood“He is in my round” – but they miss a real query: who actually wrote a check in this fund?
The fund is essential, but its true value lies in its partners – their vision, approaches and ways of working, each unique in their very own way. The name on the Cap table is less essential than a person sitting opposite you at board meetings.
If you have options, go beyond the company’s fame and delve into the real investor with whom you’ll work. Are they practical or manual? Do they support the founders in difficult times, do they cut and run away? Did they go through the same journey that you just are experiencing now?
Sometimes the best option is not the worst fund, but the partner who really gets your vision, has a strong conviction and is ready to enter with you All-in.
And remember: bringing an investor is like entering a marriage. It is a long -term relationship based on trust, common values and joint involvement in success, because you’ll build together for at least seven to 10 years.
But unlike marriage, the founders do not at all times have the luxury of selecting the perfect fit. When you would like financing, you regularly need it quickly, and which means compromises are inevitable. The key is knowledge which compromises are value making and which may come back to persecute you.
Talk to the founders whom they supported. Perform due diligence. The right investor can change the game. Wrong? Catastrophe.
Trust your intestines: red flags are only red
If something feels a potential investor – perhaps this is their approach to business, their values or the way they cope with difficult situations – concentrate. Fortunately, your intestine is rarely flawed. This is someone with whom you’ll work for years, for ups and inevitable low.
The final thing you wish is a conference room filled with doubt and friction. The rates are too high to ignore red flags or discover that “it will probably be fine”. If he doesn’t feel now, he definitely won’t feel well later.
When the honeymoon was over
Some founders treat investors as ATMs, reaching only when they need additional cash. Although this may occasionally seem efficient, it does not build the trust needed to maintain control when things turn out to be difficult.
The best founders understand that investor relations are not only business indicators – they relate to mutual trust, transparency and equalization. This means maintaining open, fair communication – not only in good times, but especially when things do not go according to plan.
Regular updates, each win and challenges, cause predictability and reliability. And when a crisis appears, investors who trust you are those that will stand with you. The ones you kept on your arm length? They will be the first to push you.