Investment (Part 9) – After the Honeymoon
October 2, 2012 3 Comments
Attempting to raise investment is an all-consuming process, and it is perfectly right that once the deal is closed, everyone can heave a huge sigh of relief and pop the cork on a bottle or two of champagne.
Maintaining good relationships with investors will require continued work however. The single most important factor is likely to be good communications, which can come through a number of channels.
Very often the main point of contact between founders and investors will be an investor-appointed director on the board. It may also be appropriate to communicate with investors in other ways. An occasional report to shareholders could keep them informed, or some investment groups run events at which companies can provide updates. Take these opportunities when they arise!
Whichever channel is in use, investors will want to see that the founders are executing against the agreed plan and that progress is being made. There is sometimes a temptation for founders to be more enthusiastic about sharing good news than bad, but well informed investors are more likely to support a founding team making a pivot or requiring follow-on investment if they have a good view of what is happening. Founders asking for more money because cash is running out when they have been painting a rosy picture are unlikely to succeed. Founders with a frank and honest relationship are likely to build trust and do much better as a result.