4 value-added investors bring to their startups

After 11 years participating in the Boards of Directors of 6 startups, founding 3 startups of my own, and successfully raising funds from over 30 investors, I believe investors bring significant value to startups.

Contrary to the views of many founders, investors often bring more than just money and can enhance, rather than disrupt, their businesses.

Firstly, founders must exert their own efforts because:

The value investors bring to your startup will not automatically materialize if you do not actively pursue it.

Most investors are busy and dynamic individuals pulled in many directions, often away from actively supporting their current investment portfolio companies.

For instance:

• They focus on sourcing new investment deals to add to their portfolios.
• They must report to their current funding partners (investors, stakeholders).
• They constantly seek new funding partners to raise capital for their new funds.
• Much of their time will be spent supporting struggling companies in their portfolio.
• If your startup is performing well, the value investors bring depends largely on how you engage them.

A) The 4 values investors bring to startups:

1)Credibility

Having a reputable investor on your shareholder list can significantly boost your startup's credibility.

It becomes easier to attract other investors in subsequent funding rounds.

Example:

One startup I was on the Board of Directors for is "King Crab."

When King Crab successfully raised funds from a reputable investor like Shark Liên on Shark Tank Vietnam, many other investors were eager to join.

2)Experience

Investors bring practical experience to your startup.

Many investors have been involved in numerous startups, experiencing both success and failure.

They share these insights with you to help your startup develop more effectively.

If your investor has experience building startups similar to yours, it's incredibly valuable.

Example:

My recruitment company, Canavi, received funding from the ESP Capital fund.

One of the fund managers, Ms. Lê Hoàng Uyên Vy, actively participated.

She helped Canavi revamp its product, recruit key personnel, all within 1.5 months.

Such invaluable experiences helped our startup thrive.

3)Accountability

Investors often participate in startup board meetings to help founders track progress and provide useful insights.

Having someone to be accountable to fosters a streamlined thought process.

It motivates you to push your team to achieve positive updates for the next board meeting.

Example:

When I joined the Board of Directors at VinCSS,

We regularly updated VinGroup, our major investor, on the company's progress.

This included product advancements, marketing innovations, expansion into new markets, or planned fund utilization in various stages.

This accountability helped us evaluate operational efficiency better, enabling timely adjustments in the current economic downturn.

4)Network

Investment funds often introduce startups to strong business development, marketing, and collaboration partners, as well as other startups in their investment portfolios.

Most importantly, you'll be introduced to potential investors in subsequent funding rounds.

B) What strategies can you employ to obtain these 4 values from your investors?

1)Maintain strong relationships

Foster positive relationships not only with investors but also with other partners and analysts within the company.

Regular touchpoints increase opportunities to access the value they can provide.

Remember, these relationships can extend beyond your current business needs, as business is a long-term game.

2)Always ask for help

Don't hesitate to seek assistance from current investors when needed.

Avoid thinking that you're bothering them.

Investors have a stake in helping you; they succeed when you do.

So actively seek their support.

3)Create competition

Investment funds naturally compete with each other.

If they see another investor actively supporting and aiding you, it will prompt them to jump in and assist as well.

Highlighting supportive investors in monthly progress reports can encourage healthy competition.

Remember that investors have busy schedules.

A good founder knows how to effectively request support.

By clearly outlining what support is needed and which current investors are best suited to help, you increase the likelihood of receiving assistance.

A vague request like "Help me connect with distribution partners" isn't what investors want to hear from a CEO.

Example:

During a Board of Directors meeting and shareholder group session at the King Crab and King Noodle restaurant chain,

We noticed that King Noodle's products were selling well and wanted to expand distribution channels.

In the BOD meeting, the CEO of King Crab requested assistance from board members in reaching out to potential distribution partners.

Specific contacts were requested for parties that King Crab was currently lacking, such as:

Food delivery apps: Shopee Food, Grab

Convenience store chains: 7-Eleven, Circle K

Board members who had relevant connections at these organizations assisted the CEO in making contact.

Would you like to add anything else?

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