How to get your investors to add value
Investors want to help their companies, but it isn’t that easy. So here’s my manual of making sure you get the most out of the people who gave you money.
1. What to expect
- Angels and VCs are people and neither just wallets nor professional psychiatrists. They have their own lives and don’t work for you. Sometimes they just won’t care or have the time. But more often they are not trained in how to help you the best. Don’t get angry if they don’t.
Think of investors like parents with too many, and grown up, kids. They care about you, want you to do well, but don’t really get you.
- Many good investors have (too) many investments. Make them care about you and want to help you. Don’t be the kid that only calls when you need more money. Include them, and most of all inform them.
2. Keep them informed
- Send regular email updates. Here’s my template. This is vital. It is virtually impossible to help someone you don’t know who is pushing the envelope in an area you are not an expert in.
- A good litmus test of an informed investor is that they can pitch your company to other investors and high-level to customers. Give them bragging bullets and keywords so that they can.
- Make sure they understand who your ideal target customer is and why they would buy. Surprisingly often startups don’t communicate this (or don’t know?) and render their investors’ network worthless.
- Do advisors meetings for the ones that want to. You can do them over dinner, in a semi-formal setting, or even over video. Once every six months make sure that you and your investors are on the same page.
3. Pigeonhole them
- Rule of thumb: If an investor isn’t willing to help out pre-investment, you don’t want that investor.
- Figure out what your investors actually are good at and want to help out with. Is it with operational stuff (financial, marketing, product management, recruitment), network (recruitment, investors), advice, personal coaching, or something completely different.
How do we best leverage your brain & network? Do you want to be involved in operations and talk to a lot of us or do you prefer that you and I interact mostly?
And, what is the best way; meetings, calls, coffee dates, or random? Should we schedule a date in a month — just pick a time that looks good in your calendar so we can kick it off.
- Ask them how much time they can and want to spend with you the coming period, and preferred mode of interaction. Do they want to meet for coffee, have regular calls, be pinged with the platform is burning, do intros, or be left to their own devices.
- Figure out the investor’s best medium. Is it Facebook Messenger, email, coffee and morning walks, or calls? Test.
- What are their biggest fears with the company? To lose all their money, to have their name dragged in the dirt, to have you living in their office, or to be irrelevant?
- Again, most investors want a great reputation for being good investors. If you help them with that, they will be useful for you.
4. Involve them
- If you haven’t involved an investor the first six months, it is usually harder to activate them.
- Bi-monthly scheduled one-on-ones. Do 45 min calls or meetings. Prepare a bit but generally just go through what is top of your head. Ping the investors you want to get help from and schedule with them individually.
- Random one-on-ones. Can be short notice, but avoid “Panic! Can we talk tomorrow”, if you did know in advance. Better to ask for help early than when the ship is sinking.
- One-on-ones with specific topic. Use your investor’s area of expertise and let them dive deep and help. On sales, growth, or anything.
- Send direct “can you help me-emails”, for example “can you intro me to X”. Make it easy for them to do it; to whom, why, and with a blurb that they can re-use.
I’m going to San Francisco 12th — 20th of March and would love intros. Mainly CTOs/techys at payment providers, but also if you know people in our space then I am happy to meet them for casual coffee. Here are some people I would love to meet:
- LinkedIn profile #1 URL (looks like you are connected to him, Janet)
- LinkedIn profile #2 URL
- LinkedIn profile #3 URL
— — — intro text blurb— — —
Hampus is the founder of Botcoin, a blockchain for chat bot attention. He is in SF 12–20th of March and I think you want to meet. Botcoin reduces fraud by 10% and they have Praypal as a client already.
- When they give you feedback ask “Why?” and get underlying assumptions. Sometimes investors say things that are good, but most of the time the assumptions are more interesting.
- Don’t hunt them down at conferences to ask for help. If you meet them at an event, be a friend and not steal their “hunting” time.
- Don’t be mad if they don’t help. Realize that they didn’t sign up to be employees but to give you money.
- Don’t mistake engagement for board seats. Most investors shun boards. Boards are for control and not engagement.
- Don’t write long emails or overinform. They will just not read it, and they will be ashamed that they didn’t and interact with you less.
Investors are useful as advisors, network, and peers who have been through product market fit and growth themselves. Make sure to use them.
- Keep investors informed. Short emails often are best.
- Profile them — how and with what can they help.
- Ask for specific things — meeting, intro, help, or advice.
Investors are like parents; they have been there before, but in another time, they want to help, but don’t necessarily know how.