How to build productive relationships with investors
By Hatty Fawcett, Founder of Focused For Business
You’ve spent your nights meticulously checking every detail of your business plan. You’ve used all your energy on endless research, tired your hands from all the paperwork and lost your voice from all the investor conversations. But – it’s paid off – you’ve secured funding for your new business and a huge weight has been lifted off your shoulders.
Congratulations! But the journey doesn’t end here. In fact, it’s just the start. Now you need to build and maintain a relationship with your investors. This is an important part of a startup’s journey, as investors can help you transform your ideas into reality and connect you with people who help your business thrive and succeed.
So how do you build a productive working relationship with investors?
Be as Transparent as Possible
The golden rule for a successful and harmonious relationship with your investors is transparency. Whether neglecting key details of a business strategy or failing to notify the reasons for a poor performance against forecast, not communicating information to your investors is likely to cause bad feelings, lead to uncomfortable conversations and, potentially, put your future investment in jeopardy.
To avoid bad feeling, be proactive and show them you can be trusted. Investors value openness and know running a business isn’t going to be plain sailing. Acknowledge the setbacks so you can regroup and try a different strategy. Hiring mentors is a good way of navigating murky waters and gives you coaching support for building productive relationships.
Be Aligned but Acknowledge Differences
Establishing your values is important when building rapport with investors. Knowing your mission, what you believe in, how you want to make a difference – and why – will improve understanding between you and your investors and instill confidence too. Value in an investor relationship goes beyond just finance. Ensuring you’re on the same page in terms of direction will help investors contribute in other ways, such as making introductions to their network.
Disagreement is healthy too so leave room for discussion. Priorities change so consistent communication is key to address any sudden changes. If the differences occur after you have taken investment, have a process for handling disagreements, don’t let them fester and worsen. Remember they will be expecting good results over time, so anything that could hinder or delay that should be acknowledged.
Provide Regular Updates
Before you take an investment, keep investors updated on how the round is going. Share any “new news” with them to show your progress within the business or with the funding round. Once you have taken the investment, make sure you keep investors up to date with the progress. A minimum of quarterly updates is advised. Keeping investors in the dark is a dangerous move and can diminish your credibility.
Seek Feedback and Appreciate Knowledge
We’re all on a learning curve, but it doesn’t need to affect your performance. Ask investors for their opinion – especially if they have experience in an area, you don’t. Listen to their feedback, consider whether your plans need to be adapted and be clear about why you are taking any course of action. Agreeing objectives and expectations makes it easier to review performance later. Willingness to learn will develop a fruitful relationship that will benefit everyone in the long run. Be specific with your investors about where you would value their guidance and appreciate what they share. Demonstrate you are interested in their ideas and open to scrutiny. Investors have many skills – make the best use of these wherever possible.
Be Proactive, Attentive, and Assertive
Finally demonstrate these key characteristics – proactivity, attentiveness and assertiveness – when pursuing your relationships with investors. These drive action and productive relationships, so will help boost your credibility with investors. Being proactive drives things forward, and means you will be ready to fix any issue as it arises. Attentiveness will help you understand where an investor is coming from, and allow you to be empathetic in your response. It is also important to have your own boundaries clear, and to be assertive in standing your ground when needed. It is easy to fall into the trap of saying yes to every opportunity. Instead, recognize what benefits your business and avoid being tempted to work with investors who are not aligned with your vision and strategy. That only stores up problems for down the line.
Investors have a shared stake in your business, present and future. It is in their interests – as well as yours – that your business succeeds, as this will provide them with a good commercial. Raising investment and keeping supportive investors are two sides of a coin – but you do need both! Don’t forget the best relationships are two-way and involve give and take, and this holds true for relationships between founders and investors!
About Hatty Fawcett: Hatty has a strong track record raising equity investment for early-stage startups, raising over £5m for start-ups in the last 12 months. She believes start-up investment should be available to everyone and the process shouldn’t be over-complicated or unnecessarily time-consuming.
Hatty focuses on start-ups raising their first or second round of equity investment and works with start-up founders and small business owners to give them clarity on the information that investors will expect, and connect them to investors and other like-minded entrepreneurs who are generous in sharing their experience and insights. Hatty encourages founders, giving them knowledge, tools and techniques they can use in their investor outreach so they grow in confidence and ability when presenting their investment opportunity. This confidence ensures founders attract a range of investors, allowing them to choose the right investor for their business and growth aspirations.
Hatty had more than 10 years of experience in getting startups funded and has seen investment from both sides of the fence, so is uniquely placed to understand the founder journey and what early-stage investors look for. Following a successful 15 year career in marketing, and a MBA from Imperial College, London, Hatty worked in two start-ups before launching her own start-up, for which she raised a quarter of a million pounds. She then looked after some of the investments Kelly Hoppen made when she was a Dragon on the TV show “Dragons Den”.
Hatty’s unique perspective on start-up funding, and the work she does to level the playing field when it comes to raising equity investment, has resulted in her being recognised as Enterprise Nation Adviser of the Year 22/23 for Finance and Funding. She is also a finalist in this year’s Great British Entrepreneur Awards.
