When delivering the perfect pitch to investors takes so much effort and causes so much stress, it’s easy for startup heads to lose sight of an important reality: Pitching is just the start of a crucial relationship. Securing venture capital isn’t just about the money. Ideally, a startup also gains smart, experienced, well-connected partners who believe in its vision. They not only want to help you succeed, they’re quite literally invested in it. Once your business has taken on VCs, here are the next steps to take.
By accepting funding, you’re giving up a measure of control. This can be a difficult idea for entrepreneurs to swallow. You dedicated so much effort to getting your startup off the ground, and now there are these outsiders who will become deeply involved almost overnight. When VCs offer criticism, ask tough questions, or make suggestions you don’t agree with, it can be tempting to disregard what they say or get defensive.
But put yourself in their shoes. Your investors took a big risk on your company. Keeping them at arm’s length can not only create tension but also defeat the purpose of getting funded in the first place. The best way to take full advantage of your VCs’ expertise is to approach them with an open mind (and open ears) from the get-go. Show them you value their input, and be proactive in seeking it out.
When you do reach out, have a specific goal in mind. VCs are just as busy as you are, so think carefully through your questions and talking points in advance in order to make those conversation more productive. If you need help or things just aren’t going well, be honest about that. VCs would rather help you work through a problem than hear about it once it’s too late to fix.
Marathon board meetings can cause headaches for everyone involved. Not only do they gobble up too much time, but they’re seldom where real decision-making and strategizing actually happen.
It’s usually better to keep VCs in the loop by providing frequent updates. This way, your VCs won’t have to digest a huge amount of information all at once, understand what’s at stake, ask good questions, and take a position all in one go. Sending out weekly or biweekly updates keeps board members informed so they don’t have to cram.
What’s more, frequent updates don’t have to be exhaustive. It could be as simple as an email with a few bullet points, or a brief slide deck with two or three key charts. Whichever approach you choose, keep it consistent so it’s easy for investors to track your progress and understand what’s happening.
Information is only valuable when it’s placed into context. Keeping all your previous reports and materials organized and in an accessible location, and in a predictable format, makes it easier for everyone involved to stay on track.
If that sounds obvious, remember that standardizing these sorts of things doesn’t always come naturally to startups, which until this point are typically more focused on growing and experimenting. You might even consider giving VCs direct access to your digital tools and past reports so you don’t have to keep pulling files and resources for them.
There’s no doubt that securing venture capital funding is a huge milestone in a startup’s journey. VCs can be a major asset well beyond the funding they bring, but in order to tap into it, you have to be savvy about building and maintaining the relationship. Just remember: It’s about your venture together at least as much as it’s about the capital.
Joe Ruck is president and CEO of Boardvantage, a purpose-built platform for boards and leadership communication.