The previous article discusses that two of the ways to make founder-investor partnership work are understanding and communication. The founders need to understand the roles of investors, and vice versa. Furthermore, maintaining communication between both parties are very essential to avoid misunderstanding.
When misunderstanding develops, things can get worse. However, when the two groups get focused on finding the solutions and realistic options for the problems, progress will happen. Agreement will be achieved.
More Tips to Make Founder-Investor Partnership Work
The following are more tips to make founder-investor partnership work for the success of a company:
Focusing on the Shared Upside
Founders are competitive people, who often measure their own success from things like the following:
- How powerful is a teamwork that they can build
- How popular the company is
- How much money they have raised
- How many profits they have contributed for the company
- How high the business valuation is
- And many more
As a result, they can view themselves as the symbol of the company itself. When the company is successful, it is the founders’ success. Such feeling can lead to arrogance. They can be dictatorial with the employees. Too high self-esteem can make the founders uncaring and tough. This can destabilize the company management.
On the other hand, investors are mostly more rational. Their main objectives are maximizing profit chances and avoiding investment loss. It is true that investors like to negotiate and question any decisions made by the founders. However, they are good partners to make sensible decisions in hard times. Again, the founders need to take one step back. Do not see yourself and the business as a single unity.
Keeping Interests Balanced
Keeping balanced interests between the founders and the investors is a hard task. Investors care the most about their investment. They feel pain when the investment is loss, since they are at the most disadvantageous position when the business fails. Investors lose their money, while founders lose their time. Keeping these in mind helps both parties to keep their interests balanced. Every party has interests in the business.
Building Solid Teamwork
Investors are less risk seeking that founders are. They decide to invest in a company after reviewing its history in a comprehensive way. Therefore, even if the company gets loss on a fiscal year, the investors may be willing to invest more as long as they still believe in the organization’s vision.
The key for this is building a solid team. Investors are mostly loyal to high-performing company. They will keep their eyes on the team members, who work behind the management line. When they are convinced that their investment is managed by the right people, dealing with financial issues in business will be way easier. Therefore, founders need to keep in mind that they are not single players in business. Every entity in the organization has its roles.
In conclusion, the efforts of making founder-investor partnership work depend upon understanding, communication, balance, and teamwork. Founders need to understand the investors’ perspective, and vice versa. When the company is faced with problems, put things on the table and find shared solution. This way, both of you can build a venture ecosystem for common success.