If you’re in the very small percentage of startups that have raised money from angel investors, congratulations! You built a business that people believe in and you have a clear plan for moving forward. But now that you’ve cashed the checks and you’re ready to deploy that money, how do you show your love to the investors who have helped you get to this milestone?
This week, I spoke with Melinda Wang, an angel investor in early stage companies, about how entrepreneurs can continue to build their relationships with their investors. She leverages her experience in corporate law, contemporary art and social impact in her investments, with a focus on women-founded companies.
Melinda gave me her top five tips on making sure your investors feel loved.
1. Agree On Expectations
After funding, you and your investors should discuss how active they will be in the business. Will they be passive investors who only want email updates? Do they wish to actively participate in business development, make introductions and help with the next raise? Yes, this is the “defining the relationship” talk! And even if you’ve discussed their involvement prior to funding, expectations may have changed during the months of diligence and negotiation, especially now that the investor is part of the family.
Like with any relationship, communication between founders and investors is key. Founders who have excelled at communication with their investors are authentic in their communication style and content. Melinda recommends quarterly updates that discuss both wins and losses. A sugar-coated summary with cherry-picked KPIs is not helpful for anyone. They also ask for feedback on the format of the communications — is there too little detail, too much? You should also keep investors posted on major events for the company, especially if the investors can be helpful — for example, if you’re launching a new campaign, appearing on Shark Tank, entering the final rounds for an important accelerator or making a major hire. And if there are challenges that could lead to disagreements, set the tone for an open dialogue with your investors.
Agreeing on communication method is also important. The founder of one of Melinda’s portfolio companies emails quarterly updates and offers to jump on a call anytime, while another founder sets up quarterly video calls structured as a presentation and Q&A. For another one of her investments, the company sends updates through the lead investor, who then communicates with the rest of the investors and compiles questions and responses. Setting a loose calendar of when investors can expect company updates also helps to avoid frustration (and is a great way for entrepreneurs to set their own accountability goals). In addition, don’t be afraid to let your investors know if they’re contacting you so often that it’s a distraction from running the business.
3. Make It Easy To Brag About Your Company
Your investors want to share the love — make it as easy as possible for them. They are probably incredibly excited about your company or they would not have invested. If you’re a consumer brand, send samples, discount codes, Instagrammable images and suggested Tweets. Create a “one-pager” that’s updated regularly and in a shared Dropbox folder that your investors can access. Invite them to demo days, trade shows and conferences you’re participating in. Your investor will benefit from learning more about the industry, and you’ll benefit from having another advocate in the room.
4. Ask For Help
Everyone loves to feel needed. Don’t be afraid to ask, whether it’s for advice, an introduction or otherwise. In your asks, be specific and direct. Melinda notes that seasoned investors likely have encountered similar situations in their professions or with their other portfolio companies and can help you brainstorm and problem solve more efficiently. Requesting introductions could be a general ask for business development prospects (e.g., a contact in the XYZ industry) or to a specific person (in which case, you should draft an email for your investor to forward). Your investors can also be helpful in negotiating and closing a deal. Asking for help is certainly not a sign of weakness, and allows your investor to stay engaged.
5. Invest Time To Develop Your Relationship
Many founders unfortunately see “investor relations” as an unpleasant task, but developing a relationship with your investors should be viewed as an incredible opportunity (and not just for your next capital raise). Remember that a shared mission brought you together. Your investors chose to take a risk on your company, mostly because they believe in YOU. Take time to get to know your investors, plan your communications and build the future together.
Love is a two-way street (one hopes!). The more love you show your investor, the more love you’ll get back.