Startup and Investor Communication: Expectations vs Reality
Considering venture capital investment has reached its highest point in years, with more than $148 billion invested in 2017 alone, the current startup investment market is incredibly strong. However, investment alone is not enough.
In order to survive and thrive, effective communication is imperative — but expectations do not always match reality.
Evaluate the Level of Communication as a Founder or Investor
Although the importance of proper communication between investors and founders seems fairly obvious, expectations are not always met. In turn, both parties are affected. Whether you are a founder or an investor, it’s critical that you maintain an honest and transparent relationship from the get-go.
Unfortunately, this is not always the case and certain expectations are not addressed, including:
Discussions regarding the challenges in which founders are facing. Many investors agree that when a founder begins to go silent, this may be a sign that trouble is ahead. As angel investor Jason Calacanis said, “If your startup isn’t sending you monthly updates, it’s going out of business.” When things are going well, founders communicate swiftly. However, when things aren’t going very well, many go silent instead of asking for the help they need and would likely receive.
Regular discussions about the business in general. Even if there are no specific challenges in which the startup is currently facing, regular communication ensures that everyone is on the same page and that opportunities are seized. Investors aren’t just there to increase cash flow, they are there to help, offering their network of connections. Send regular emails listing your current top 2-3 priorities, current account balances, key points regarding your latest KPIs, and other updates in terms of challenges, press, etc.
Founders are expected to ask for help, especially during the seed stage phase. From pricing to product direction, market segmentation to customer acquisition, this is a critical period and failing to ask for help could be detrimental.
In summary, it's imperative that both parties, particularly the founders, are concise, clear, and consistent.
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