How to Get the Most Out of Your Investor Relationships in 2023 • businessroundups.org

For founders who excite after a challenging year and plans for the new year, now is an excellent time to re-evaluate your relationships with the investors you work with.

I’m lucky enough to be able to work directly with nearly a dozen early stage startups and observe the interactions between a few dozen investors and founders. Through it all, I’ve seen some founders outperform others by leveraging the strengths and wisdom of their investors while looking out for trouble.

What can founders do to rekindle their investor relationships? Here’s a short list of do’s and don’ts derived from what I’ve learned over the years:

Know your investor

As with any long-term relationship, knowing who you’ve chosen to work with is essential.

Investors, like all people, have different personality traits and sometimes associated flaws. This can be difficult to estimate at first, but make sure you don’t ignore it.

Here are some examples of personality traits I’ve seen and how founders can learn to work with them:

• Some investors could improve on follow-up. Maybe they’re overinvested and need more time, or they’re just scattered. Regardless of the reason, if you need anything from them, it’s your job to be organized about your requests and follow up on them on a regular basis.
• Some investors react too sharply and unproductively at the first sign of weak corporate performance. They can see doom and gloom everywhere and repeat any negative market sentiment. It is difficult to have a balanced and open conversation with such people. It’s best to write down a few well-thought-out options before you get started.
• Some investors may have a huge ego that comes out when you disagree with them. This trait is the most difficult one to deal with because any discussion is based not on content but on power dynamics. If you have such an investor, have fact-based conversations and draw the line (often and early) on whose decision this will be.

Tap investors for breadth over depth, but be careful how you do it

If you have an investor who is actively investing and involved in their portfolio, they will be well versed in market and industry trends.

They can be a valuable source of information for questions such as:

• How do other companies in my stage grow annually?
• Who is the best sales recruiter for a B2B software company?
• What valuations do companies in my stadium get?
• What’s the sentiment about investing in my space these days?

Founders may want deeper conversations with their investors. Here’s a typical example of an in-depth topic and some practical do’s and don’ts: