It’s no secret that venture capital is relationship-driven. That partly explains the demographics of the industry, which skew heavily white and male–and, in turn, the types of founders VCs often gravitate toward. Nearly three quarters of U.S. firms don’t have a single female partner, and in 2017, women-led startups received just 2% of venture capital dollars.
But founders can take certain steps to foster relationships with investors over time. Whether you’ve snagged a meeting with a VC firm or secured funding, five VCs share how founders can better navigate and strengthen their relationships with investors.
Be up front about bad news
“There is a saying that bad news should go out to investors instantly, while good news can wait,” says Upal Basu, a general partner at NGP Capital. “The opposite is far more common.”
But the bad news is often just as important–if not more important–than the good news. If your company has customer retention issues or is on the verge of missing quarterly numbers, your investors should be in the know.
“The most successful relationships are where the founder reaches out very quickly to their investors when they foresee a problem,” Basu says. “Good VCs are patient and recognize that a company will have ups and downs through their process and do not get flustered easily.”
As Sam Wick, the head of ventures at UTA Ventures, points out, sharing that kind of information freely can also help guide VCs through future investments. “While an investor’s insights can help founders grow a successful business, the founder’s insights and relationships are equally as valuable,” Wick says. “It really is a two-way street.”
Make time for face-to-face meetings
J.J. Kasper, the founder of Blue Collective, recommends a simple strategy for maintaining good relationships with investors: Carve out time for them the way you would for friends. “This means take time out of your schedule on a regular basis to meet with VCs face-to-face,” Kasper says.
It might be tempting to stick to offering updates via email or sending your investors gifts during the holiday season. “That’s not the recipe for a strong relationship with a person, let alone a VC,” Kasper says. Investors may not be your friends–but Kasper believes face time is the most effective way to build rapport with them, as is usually the case with friends. “Just treat VCs as you would treat anyone you are trying to be friends with, which requires spending time together,” he adds.
Treat any introduction like the start of a relationship
Caitlin Strandberg, a principal at Lerer Hippeau, sometimes meets founders whose ideas are interesting but aren’t a fit for her firm. Even in those cases, she says, founders shouldn’t let the relationship fizzle. “With early-stage companies, particularly seed-stage, it’s important to remember that the community is generally small and you’ll likely be in the community for a long time,” Strandberg says.
One way to keep investor contacts in the loop is by giving them consistent updates on your company’s progress. A monthly newsletter that highlights your company’s successes and growth is an “easy and seamless way to stay connected,” according to Maxine Kozler, the co-managing director of LDR Ventures. “This simple technique allows VCs to feel connected to your company and ‘in the know’ when your company comes up in conversation,” she says. “Make it easy for them to stay up to date on all your hard work, and they’ll become advocates.”
Even if an investor passes on your company, their network and know-how can prove useful. “I stay in touch and follow the company’s progress, connect them to potential hires, introduce them to other investors, and even call them for domain expertise or perspective,” Strandberg says. “I think any meeting–from a coffee chat to a pitch meeting–is the start of a relationship, which compounds over time if you invest in it.”