How to Manage the Investor Relationship

Entrepreneurs, see how to have a mutually beneficial relationship with your investor

Panelists talk financial management at "After Funding: Managing the Investor Relationship" panel (Image: Mike Street)

Are you having trouble managing your relationship with an investor?  During the Black’s in Tech #BitHouse panel “After Funding: Managing the Investor Relationship” at the South by Southwest (SXSW) in Austin, Texas, Felecia Hatcher, chief executive at Feverish Ice Cream; Brian Dixon, venture capital associate at Kapor Capital; and Heather Hiles, CEO of Hiles Group, a philanthropy consultancy firm, and CEO of Inspired Life Media Group Lisa Nicole Bell gave deep insights on the art of managing a relationship with an investor.

Here, BlackEnterprise.com outlines 5 tips to managing the investor relationship:

Do your homework – VC firms will dig deep into your past because they want to make 100% sure that you’re the right fit. And, as an entrepreneur, should dig deep into the VC firm. You need to ensure they’ll be able to bring the right resources to your business to help it grow. “Do as much homework on the VC firm as they will be doing a lot of homework on you. Remember this needs to be a two-way relationship,” says Hiles.

Set clear expectations – “Milestones and expectations are critical for managing the overall relationship between a company and investor. Be as clear as possible,” Hiles says. Being as clear with an investor on expectation and milestones will help to clear up any future headaches.

Talk with your investor – Open and clear communication is critical. Setup monthly or even weekly meetings with an investor so they are fully aware of exactly what’s going on and the overall progress that’s being made. “Talk in full detail with your investor on what success looks like. Do not leave is up to guessing,” says Dixon. “The more this can be defined, the better you will be for meeting and exceeding expectations.”

Time is money…remember that – “Don’t waste anyone’s time. Tell your investor what you need help with and what you don’t need help with,” Dixon advises. “Otherwise, they might be sending over resources to fix problems that don’t need to be fixed.” Express your overall needs to your investor. He/she is available to help make sure that your business is a success. So, be clear on exactly what you need from him or her to help your business win.

Grow slow – “If at all possible, try not to take on an investor. You never fully understand what power you are giving up and over to someone else,” reminds Hatcher. “If I had the chance to do it over again, I would have not taken on an investor. Sometimes growing slow is better,” If you’re not fully ready to meeting the full demands of an investor, then it might be best to hold off.

Follow BlackEnterprise.com’s coverage of 2013 South by Southwest (SXSW) at blackenterprise.com/technology.

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