Companies with a healthy relationship with their investors are happier companies. Unhealthy relationship between investors and founders can be quite stressful. That’s why it is critical for startups and their investors to work as a team and be on one side of the table.
While some responsibility of ensuring a healthy relationship is obviously with the investors, founders have a critical role to play in this process.
Clarity on goals and objectives
The starting point of course is to ensure that your investors and founders are aligned on the goals & milestones and objectives of the company, and the parameters on which progress is to be measured.
Agree on the communication and intervention processes
Getting investor agreements on the periodicity and format of reporting and engagement is helpful in ensuring that the intervention is structured and planned. A monthly review is suggested for startups, though in concept stage companies founders may benefit from the experience and the business relationships of investors and hence may engage more frequently.
Communicate early on challenges and issues
No one expects to have a smooth journey and challenges and roadblocks are part of the journey. Your investors are critical stakeholders in your progress. Hence, if there are challenges and issues, often investors can assist with solutions. Communicate early and be transparent.
Reporting and templates
Investors and founders should agree on the format for reporting progress. Information that captures the key parameters should be drawn and presented every month to investors.
- Overview – a one-para summary of what has happened since the last interaction (e.g. on product, customers, people, brand, etc.)
- A para on how the business is progressing as per the plan (including what is working well, and what is not progressing well – could be on customers, pricing, costs, people, cost of servicing, etc.)
- Highlight challenges or red flag any thing that you see as issues
- Outline what you wish to achieve in the next month (I have noticed that investors may not pay too much attention to this para, as usually it is transactional and mundane. However, if it is not there, it usually creates discomfort. Just having even the regular stuff in this is reassuring that all seems to be well.)
- If needed, seek assistance in any area that they can help
Have formal board meetings, including structured meetings with your advisory board members
Apart from it being mandatory governance requirements, quarterly board meetings are a good forum to engage with a wider group of stakeholders where progress, challenges, issues and direction changes, if any, can be discussed.
