The speaker emphasizes the importance of starting early when building investor relationships and consistently delivering on promises. He also advises founders to add value to investors first and get to know them before accepting their money.
What this video covers
The first thing is, you want to start early. I find that most of the entrepreneurs that I find, they wait until the last moment where they actually need the money. You need to start early. As an entrepreneur, if you’re building a meaningful business and if you want to build a billion-dollar business, you want to start very early.
Do what you say. That’s a really big one because on day one, you’re going to be meeting with that investor, and you’re going to tell them, “We are thinking about being here. We’re thinking about, and we’re making the promise of being here.” So, over the course of time, they’re going to see how you’re delivering.
Then you also want to add value first rather than taking and taking and taking, which is what everyone does. Do it differently. Go with adding and adding and adding.
Then, you want to get to know them first. Before you even take the money from that investor, remember, it’s going to be much harder to divorce from your investor than to divorce from your husband or wife. So, you want to make sure that during this dating phase, you’re getting to know them, and you get to see how they are and how they behave. Maybe you take them for a coffee; you take them for lunch; you can ask the waiter to bring the wrong order on purpose so that you can see how they behave during difficult and challenging times because that’s what you’re going to get when your business is not performing.
You need to have people that are going to jump in, that are going to help you, that are going to roll up their sleeves, and that they’re going to do whatever it takes to turn things around rather than treating you as a write-off because remember, that if they treat you as a write-off, that’s going to send a negative signal to the market. A write-off basically is that they’re not going to reinvest in your business.
Maybe you’re on the press. Maybe you get a new hire on the team. You want to be up to speed catching up with the investor, take them out for a drink, whatever that is so that you are building that friendship, that trust, that they get to be part of your business because, at the end of the day, that investor is not only investing in you, they are investing to help you in building the business. So you want them to be part of those celebrations of those victories.
You also need to be ready to share the tough things. Part of building that trust and that relationship is not just sharing how beautiful everything is.
But if you go out, and you seek their advice, and they see that you’re coachable and that you’re listening, that’s going to be an absolute plus for them to say, “You know what? This entrepreneur is listening. They’re coachable. I would feel completely comfortable and excited about helping them to build the business, and that’s where you want to take it. So, always be authentic. Don’t be superficial. Don’t be fake. Don’t tell lies because those are going to always come out.
Next, you want to build or send regular updates because by sending regular updates, you’re going to be keeping them up to speed. It depends on where you’re at with the business, so the later that you are on the lifecycle of the business, the less updates you’re going to send. It could be quarterly updates. But the earlier that you are, it could be monthly updates. It could be weekly updates, but you want to keep them up to speed.
A big thing of developing those relationships with investors is by establishing trust right off the bat. The way to do that is by getting warm introductions from people that are already in the circle of trust of that investor. This could be accountants; it could be founders; it could be lawyers; it could be investors that they are sitting on boards with, but essentially people that are already working with that investor, and they know that investor well.
