How to satisfy startup investors?
Entrepreneurship

How to satisfy startup investors?

A lot has been spoken in the web already about tips on getting investors as it is one of the hardest stage in the lifespan of a startup. However, maintaining a good solid relationship with investors once you have them on board is as crucial and difficult as getting them.

If you are in a startup business, it is very likely that you will need to do some crowdfunding for your business to launch your MVP and get it going. Sometimes building the MVP is already expensive enough that at this early stage you will be looking for investors to back you up.

A lot has been spoken in the web already about tips on getting investors as it is one of the hardest stage in the lifespan of a startup. However, maintaining a good solid relationship with investors once you have them on board is as crucial and difficult as getting them.

Also Read: 5 Steps For Startups To Raise First Investment

As a startup with a promising project, 2 years ago we needed investors to support our marketing budgets. It took 7 months to close the deal and start the cooperation. Not the easiest months in a startup’s life. Once it was done we took a deep breath and thought that the toughest part was behind. But we were wrong and have learnt quite a bunch on the way.

So without much speaking around, here is a set of rules to follow if you want to build a strong and healthy relationship with your investors based on mutual trust:

Make frequent meetings with investors to report on progress.

Schedule board meetings with investors every 3 months to inform them about your progress and, specifically, where you are standing in terms of the growth plan. Silence or absence of frequent communication on this topic can build a lack of trust to your business.

On those meetings tell them about most important milestones that you have achieved in the past quarter and what strategies are you planning to implement to attain goals of the next quarter. When talking about your plans, describe the actions you will undertake now (not those in 3–5 months), but focus on major benefits they will bring for the business’ future (1–2 years ahead).

Showing investors that you are doing now the best you can to make the project grow will give them confidence in your business’ success. In the end, they are not as interested in your business’ short-term advancements, as in your long-term profitability.

If something goes wrong, inform them.

Do not hide it. It’s only advantages to you to keep investors informed about the obstacles you face. First of all, honesty has always been fundamental to any relationship, including business ones. Secondly, it indicates transparency which is a long-term driver of a valuable relationship.

Transparency is a sign of trust. The more you disclose your business to your investors, the more trust you gain from them.By informing them about your problems and your plans to overcome them you also show them that you are in control of the situation. Plus if they know of an issue in time, they can often help to tackle the problem you are facing or connect you with the right people.

If something goes right, inform them.

Communicate both wins and challenges and do it frequently. Even though investors are not interested in hearing about your daily operations, they will be happy to know about your successes and take pride on them too. Emails are a good form of such updates: they allow you to get back to them and reference them during board meetings.

Revise the plan when needed.

Do not be afraid of doing it. There is nothing wrong with openly acknowledging that something did not go as planned. What is wrong though is keeping the plan, although the project has not met growth expectations for the last 3 months or more, in a belief that you will catch up in the next quarter.

Imagine if you don’t (which is quite likely if your forecasts are drawn with a positive curve), your investors will not be happy. Your trust and reliability will be damaged. As Marc Andreessen, one of the biggest California based startup investors with a portfolio of companies such as Optimizely, Airbnb, Asana, once said “adaptability is a key”.

Be authentic and respectful in the way you communicate with them.

Do not be afraid to get on a more personal level and leave the formalities behind when the situation feels right. According to the founder of Ebay, Pierre Omidyar, “an honest, open environment can bring out the best in people” and it is very true.

In practice what you can do is, for example, once in awhile invite them for your corporate events and let them meet your team. In a startup formula every employee is crucial to its success. So introduce investors to your team and set a comfortable environment for them to ask questions or engage into discussions.

This move often helps to break the ice and create a base for a more productive business relationship. Interacting on a more casual level does not mean that you should forget about their importance for your business. Showing respect and appreciation for ideas they share with you will present you in a favourable light.

Also Read: List of unicorn startup company in india

Do your best to meet the forecasts.

And, of course, the hardest but the most important way to keep your investors satisfied is by meeting the forecasted growth plan. Not a single investor wants to see a failing business. Neither do you, if it’s your own.

Overall, the golden rule is to communicate. Remember that it is a relationship and there is no strong and healthy relationship without communication from both side. Do it frequently and remember to mention both positive and negative sides of the coin. Following the above mentioned steps will help you build trust from investors and present you as a reliable partner.

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