You’ve spent the last six months working around the clock on your latest fundraising round, hustling to line up the best possible syndicate. Finally, the docs are done and the round is closed. Now what?
For founders, raising a round of funding is only a small part of the journey you’ll take with your investors. After you’ve announced your news and the dust settles comes the real work. You and your investors will work in tandem to help your company meet the milestones you’ve set to take it to the next level and prepare to raise more money down the road.
But, you can’t expect your investors to tell you exactly what to do. Instead, founders need to learn to manage up, and make the most of the new partnerships they’ve formed.
How can founders make the most of their VCs? Here are five ways to put your investors to work after you’ve finished fundraising.
Rule #1: Always ask for help
The one, biggest mistake I see entrepreneurs make when working with their VCs is that they don’t ask for help. It sounds simple, but it’s easy to forget.
If you take away one lesson from my writing here, this is it: always ask for help.
Pretending everything is running smoothly and going great won’t help you, your business, or your investors.
But, there’s a right way and a wrong way to ask for help. Set yourself up for success by adhering to the following four rules to clarify your ask to investors.
Rule #2: Don’t bury the lede
What does this mean? Here’s an example.
I’ll be in a board meeting and we’ll be going over the company’s business. The team will share how they’re meeting or beating their plan and, finally, as we come down to our final 10 minutes, the founders will bring up their asks.
What tends to happen next is those in attendance rush their advice and quickly assign follow ups. But now we’re over time, can’t dig into the problems, and have to take the conversation to email.
Avoid this problem in your board meetings, especially at the earliest stages of your company. Board meetings are about getting you through roadblocks, not just about reporting progress. Even if you don’t have significant obstacles, still make it a habit of leading with your asks.
So, you’re asking for help and not burying the lede. Now, let’s talk about how to craft your ask.
Rule #3: Be very specific
Here’s what I mean.
Let’s say you’re looking for a marketer. You can write a note to your investors to tell them you’d like to find someone to manage “marketing and brand” and see what they say. You’ll probably get a couple resumes, and some might be a fit.
Alternatively, you could reach out to your investors and share more specific qualifications you’d like to see in a candidate. Then, your ask changes from “seeking a marketer” to “seeking a customer acquisition specialist with 3–5 years of experience, preferably in charge of a small team at a Series A e-commerce company, a capable manager, but upper management experience is not necessary, and open to remote arrangements.”
If you’re clear with your requests to investors, you’ll not only get more referrals, but the ones you receive will be more relevant to your needs. Being specific shows your investors that you’ve thought through what you’re looking for and, in turn, allows them to better serve you and your company with targeted suggestions.
But, what if you don’t know what to ask for? Turn to rule four.
Rule #4: Discover what you don’t know
Maybe you don’t know the exact terminology for a role you need to fill, but have a general sense of the function. Ask your investors to help you nail down your query.
Founders don’t know what they don’t know. Part of a VC’s job is to help founders ask the right questions.
Walk your investors through your situation and they can help determine a solution. The sooner you find out what you don’t know and bring it up to your VC’s, the sooner they can help you look for solutions.
Now, as a startup, there are probably a million things you don’t know. And, asking your investors to solve these problems might seem like an easy way out. But, that’s not going to help you make the most of your partnership. There’s a better way.
Rule #5: Be realistic
Investors aren’t a magic pill for all your company’s needs. Founders need to be realistic about their responsibilities and those of their investors. Having unrealistic expectations of what your investors can do for you will slow down your momentum and create an unnecessary burden for those supporting you.
An example: strategy is one of those things only a founder can drive. Investors can help founders think through their strategy, but it’s on them to make and execute on their decisions. VCs back founders because they believe they’re capable of doing so.
At the end of the day, founders are in the driver’s seat and their investors are their guardrails. We’re here to keep you on course, but you’re behind the wheel. Make the most of your partnerships with your investors and they will go to work for you.