27
Jul

Investors: What Have You Done For Your Startups Lately?

Over the last two weeks I’ve spent over 24 hours driving to various client meetings for one of our startups. Yes, the ratio of driving time to meeting time (6:1) is pretty high, but these were crucial meetings that were significant milestones for the startup. During these long drives I had a lot of time to think about the crazy things we investors do to help our startups.

At the same time, behind closed doors I hear a lot of entrepreneurs quietly complaining about how little hands-on help or “value add” their investors bring after closing a deal. So I thought I would put out a challenge to Angels and VCs: What Have You Done For Your Startups Lately?

If you’re wondering what more you can do, here are some suggestions:

  • Work your Rolodex – Remember all those times you bragged about your fabulous network? Besides the week after closing, when is the last time you systematically went through your contacts and opened those doors?
  • Make sales calls – Don’t just shoot off intro emails. Pick up the phone and call in favors. In the early days most sales will be through personal persuasion/coercion.
  • Have a good elevator pitch – I’ve met a lot of investors who can’t give a convincing elevator pitch for their startups. Your elevator pitch should be as good as the CEO’s.
  • Know the details – Knowing the size of the market is great for evaluating a business plan, but do you know the crucial details of the business? What specific segments are they targeting? Who are their customers or prospects? What are the features and technology. What’s the price? Knowing the details makes you a knowledgeable ambassador for your startup rather than someone who can just put someone in touch with the CEO.
  • Give feedback – Investors have a habit of dropping out of sight then giving harsh feedback at board meetings. I always tell entrepreneurs to manage upwards, i.e. manage your Board. But the same applies for investors. Be a hands-on mentor to your entrepreneurs. And don’t forget that praise is feedback too.
  • Get your hands dirty – Besides providing sagely advice from the “high level” think about giving day to day help once in awhile. You can be sure your startup needs it. If you’re financially minded (which you are because you’re an investor right?) get into Excel and help the CEO develop projections and budgets. Sit in on practice pitches and help build their next sales deck. Look over their legal documents and fire up your MacBook to test the latest deployment on Safari. Getting tactical means saving the management team precious time.

At Flow we take hands-on to the extreme because that’s our model. Not many investors are writing code, closing sales, executing marketing plans and recruiting employees. But no matter what your model is you can be sure that your startup needs you.

Comments ( 3 )
  • Mark MacLeod says:

    Great post Raymond. A clear call to action for investors. Not all have your model and it is a constant challenge to add value to your existing investments while looking for new ones – but no question, entrepreneurs always feel their investors can and should be adding more value!

  • Barry Paquet says:

    Well said. Start-ups seek “smart” money precisely for these reasons. As an entrepreneur, I’m always looking for ROI/value creation from all my resources — including investors. Although it might be implied, I’d extend this notion to board members as well. Dead wood is for camp fires.

  • John says:

    Great post. Start-ups do seek “smart” money but I believe it is the resources shared (from vcs/angels, etc) that enable them to find and make money quicker. This is where investor networks bring the most value.

    John
    ADstruc
    john@adstruc.com
    http://www.adstruc.com

    *We are an early-stage internet startup company building an online marketplace for outdoor advertising. ADstruc is looking to secure seed funding to channel into marketing and operations.

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