How to make the most of your investor relationships in 2023 • TechCrunch
For founders winding down from a challenging year and planning for the new year, this is an excellent time to reevaluate your relationships with the investors you work with.
I am fortunate to be able to work with almost a dozen early-stage startups directly and get to observe the interactions between several dozen investors and founders. From all this, I have seen some founders do a better job than others tapping their investors’ strengths and wisdom while watching out for trouble.
What can founders do to revitalize their relationships with investors? Here’s a short list of dos and don’ts gleaned from what I’ve learned over the years:
Know your investor
As in any long-term relationship, knowing who you have chosen to work with is vital.
Investors, like all people, have distinct personality traits and sometimes associated shortcomings. This can be hard to gauge initially, but make sure you don’t ignore it.
Here are some examples of personality traits I have seen and how founders can learn to work with them:
Be ruthless about how you spend your time, especially with your investors.
- Some investors could improve at follow-through. Maybe they have made too many investments and need more time, or they are just scatterbrained. No matter the reason, if you need something from them, it is your job to be organized about your requests and then regularly follow up.
- Some investors react too sharply and unproductively at the first sign of weak business performance. They may see doom and gloom everywhere and echo every negative market sentiment. It is tough to have a balanced and open conversation with such people. It is best to have a few well-thought-out options written down before engaging with them.
- Some investors may have a huge ego that will surface when you disagree with them. This trait is the toughest one to deal with, because any discussion is not based on substance but on power dynamics. If you have such an investor, make sure to have fact-based talks and draw the line (often and early) about whose decision this will be.
Tap investors for breadth over depth, but be careful how you do it
If you have an investor actively investing and engaged with their portfolio, they will be well versed in market and industry trends.
They can be a valuable source of information for questions such as:
- How are other companies at my stage growing annually?
- Who is the best sales recruiter for a B2B software company?
- What valuations are companies at my stage getting?
- What is the sentiment about investing in my space these days?
However, founders may want to have deeper conversations with their investors. Here is a typical example of a deep topic and some practical dos and don’ts: