6 Tips for Startup Founders on Building Strong Investor Relationships

Onboarding an institutional investor marks a seminal milestone for an early-stage startup. It kicks off a long-term partnership between founders and investors that must withstand the inherent ups and downs of building a business. Constructing a healthy relationship requires understanding investor expectations coupled with proactive communication from founders. As the founder, you set the tone through ongoing transparency, engagement, and collaboration. Making investor relationships work relies on instilling trust and communication early on.

1. Maintain Open Communication Channels

Consistency in providing key updates and metrics to your investors fuels trust. Develop cadences, whether monthly or quarterly, for sharing dashboards on traction, user growth, churn, etc. Proactively highlight major milestones reached as well as hurdles faced.

"Just as in any relationship, including a marriage, you have to constantly work at it, you have to nurture it, and earn the right to call yourself a true partner, and Turbostart’s model the way we operate is, basically based on that kind of building over a time, establishing credibility, coming through, you know, watching their back, being there for them at the right time, for example," says Venkat Raju , CEO, Turbostart

2. Embrace Investor Insights as a Sounding Board

Investors are reliant on the entrepreneurs in their portfolio to provide them the necessary information periodically. While, as a founder, you steer day-to-day decisions, leverage your investor’s expertise by updating them early when considering major strategic pivots or shifts in direction. Their external perspective on potential business model adaptations can prove invaluable.

3. Set Clear Role Expectations

Agree upfront with your lead investors on what requires formal board approval versus autonomy reserved for founders and leadership. Define procedures for governance issues like adding new investors, appointing independent board members, future fundraising approaches, etc.

4. Regularly Consult Your Investors as Advisors

Do not go it alone when facing key strategic decisions or obstacles. Set up regular check-ins to tap into your more experienced lead investors as trusted advisors. Keep them updated with transparency, not just when capital is needed.

5. Schedule Biannual Strategy Reviews

Institute biannual working sessions with engaged investors to step back from day-to-day pressures. Discuss latest market landscape, new competitive threats, potential pivots or business model adaptation ideas. Even though it is you who makes the ultimate decision, constructive feedback spurs growth.

6. Prioritize Impact Alongside Financial Returns

The most aligned founder-investor relationships focus not just on ROI but also on the positive change enabled for diverse stakeholders – employees offered opportunities, carbon emissions reduced, small businesses empowered, etc. Tracking and optimizing for these impacts matters.

Healthy founder-investor relationships require effort but pay dividends in unlocking startup success, growth, and ability to attract capital. Founders should concentrate on instilling trusting communication, governance and impact tracking to enable enduring partnerships.