Key Takeaways
- The investor who is most helpful is rarely the one who responds most enthusiastically to your pitch.
- Great investor relationships are built on honest communication, not on performance.
- The board dynamics you establish in the first quarter are the ones you will live with for years.
Founders spend enormous energy on the fundraising process and relatively little on thinking about how to structure the investor relationship once the round closes. The quality of that relationship, and the specific norms established in the first 90 days, significantly affects what the investor relationship produces over the life of the investment.
Setting Communication Norms
The first investor update after a round closes sets a template for all subsequent updates. Founders who write clear, honest, specific updates in the first quarter, covering what went well, what did not, what the priorities are, and what specific help would be useful, establish a communication pattern that investors match. Founders who write vague, promotional updates in the first quarter receive vague, promotional responses and a relationship that does not generate useful help.
The Most Useful Investor Is Rarely Obvious
In most syndicates, there is one investor who is particularly useful for the specific challenges the company is facing and several who are broadly knowledgeable but not specifically helpful. Identifying who the most useful investor is and investing in that relationship early produces better outcomes than spreading effort evenly across the entire investor group. The useful investor who knows they are valued becomes more generous with their time and network than they would otherwise be.
Board Dynamics in Year One
The board dynamics that feel comfortable in year one are the ones that determine how the board functions during the hard moments in year two and three. If the culture in year one is one of honest reporting and genuine problem-solving, the board will function as a resource in difficult moments. If the year one culture is one of performance and positive framing, the board will be unprepared for difficulty when it arrives, because they will not have the context to help effectively.
"The investor who helped close the round is not necessarily the investor who will be most helpful building the company."