Managing Investors (The Investor’s Series)
Managing Investors
I have been an investor to Startups since 2011, when I sold off my first business after having run it from 2005 then. It was a mobile security Anti-Theft software company.
Since then I have invested in a handful of Startups in Asia, from Hong Kong to China, Thailand, Malaysia, Indonesia and Singapore. Over the years, while scouting for good companies to invest, there are also a lot of lessons that founders and business owners must realize in the game of investments by High Net Worth Individuals, VCs, Family Office etc.
1. First 3 months is most important
Justified their reasons for investing in you. Some investors will be monitoring closely at the numbers especially for those who did a fantastic presentation and promised the skies within the first 100 days.
Make it a practice to have the necessary monthly reports property documented not just for reviews but also for auditing for the next round of funding too.
2. Expectations
List it clearly quarterly (Or when the money to be released) by the investors and at which milestones.
Too many times, I had seen first time Investors leaving everything to the owners to decide when they need the money, or that the founders leaving it open to the funds to come in. Always put in writing what are the milestones to be met and at what timeline so that there are rooms for discussions.
3. Don’t change CEO
It is important to bring what was promised and presented to the end goal by the same people.
Investment means the involvement of operation, money, legal, SOP, sales, R&D and many other related matters, do not give surprises to the direction of the business overnight.
4. Don’t overshare, make someone else your confidant
We invested in your business but do not make us your best friend to share every single details of whose colleagues' cats just given birth.
Come to us if you need advises, directions and only when necessary as not every investors want to be involved in the daily operation. We prefer to leave you to run as ultimately we are the smaller shareholders and we respect you as the Head of the company.
5. Be straight up with us when you face problems
Come to us if you have any problems so that we can help to give you a different perspective, advises and maybe to nail the issues before it gets bigger.
Do not hide the problems as the last thing we want is the entire collapse of the business, with mass departure of employees, lawsuits by ex-management personnels or rumors going around of poor financial practices that resulted in frauds.
6. Keep your cool at board meetings
It is common to have disagreements during meetings and especially during board meetings where each investors and founders have different opinions and practices.
But never lose your cool and say things that you do not meant. It may sow the seeds of unhappiness amongst everyone and result in pushing each others out of the company that result in irrecoverable damages to the business.
7. Investors need you more than you need them, but make us think otherwise
You are the dreamer that made it far enough for us to invest in you. If we don't trust you and your team, we will not put in the money and resources to support you to get a returns at the end of the day.
Each investors have our own agendas and we want to see it accomplished and fulfilled so that we can move onto other projects.
8. Come through confident and not speak without thinking
Be confident to deliver bad news just as much as on good news but do it with solutions to resolve the problems. We do not want a CEO and its team to get nervous everytime they faced challenges and expect the investors to save them.
Be smart, open your mouth with something smart and not to speak or act foolishly just to impress your authority. We had seen a lot of these and we know how it usually end for someone who speaks nonsense and no action to back it up.
9. Use the money to grow the business, not your own wallet
The last thing Investors want is to see you upgrade a bus ride to a 911 ride with our money. Giving yourself a huge salary bump and start to behave as if the money is yours and not the business will be a big red flag.
We will share with you our concerns first and then start to collect information about your misdeeds if it leads to nowhere. No one wants to be treated like a fool.
