It’s finally done—your deal closed, the funds are in the bank, and now it’s time to break open the champagne and celebrate this important milestone for your business.
Except almost as fast as you can pop that bottle, it’s time to be accountable to the people who put their faith in you. As the post-raise glow fades away, what’s revealed underneath is a pressure to spend the money you raised and communicate your decisions to your new bosses: your board of directors and your investors.
The transition from rogue innovator to accountable business owner can be tough, but it doesn’t have to be. Here are three tips to make sure you have a soft post-raise landing:
1. Personalize consistent communication with your investors and board members
Now is the time to brush up on your communication skills, specifically for investor updates and board meetings. In a survey of 870+ founders, 60% of them said they send investor reports on a monthly basis, and seed investment firm NFX agrees this is a “sweet spot.”
Here are some best practices to help you brush up on your communication skills:
- Personalize your emails to investors: It might take a bit more time, but your investors will appreciate a personal email addressed to them rather than a blanket bcc to everyone. Every time you send an update, provide information tailored to their investments or interests. Send your personalized reports via a secure link so you can track whether they’ve opened and read the update.
- Commit to consistency to soften future bad news: Consistent communication with investors can provide a buffer for bad news during times of crisis. As Erik Berg, investment analyst at Rev1 Ventures, puts it: “Developing a regular cadence with your updates will take a lot of the punch out of anything that is less than perfect. An email received after not hearing from a founder for 6 months saying that a company missed one of their revenue milestones…seems like a catastrophe.” Bad news as part of a regular update, on the other hand, is a launching off point for solutions.
- Use document analytics to improve communication: You deserve to know who’s actually reading your investor updates—so you can improve them in the future. Document tracking tells you which investors are viewing your update, for how long, which slides and tabs they’re lingering on, etc. You can’t improve what you don’t measure, and paying attention to communication metrics like these can help you build stronger relationships earlier.
2. Spend money based on a plan, not pressure
After a raise, founders can feel a lot of pressure to spend that money quickly on hiring. If you’re still in the early stages, you’ll likely need to hire a chief operating officer if you don’t have one already, but beyond this key hire, it can be tough to quiet the pressure to hire more people without a solid plan, just because you have the money to do it.
David Kenney, corporate advisor and Sydney director of Startup Grind, says “spending priorities always depend on how early stage you are” and encourages founders to ask three questions before they make key resource decisions:
- Is my product ready?
- Are there things I need to build before I can monetize my product?
- Do I know what kind of customers I want to attract?
When you make hiring decisions based on product goals and/or customer goals, you’ll have a solid rationale to educate people who don’t know your business as well as you do.
3. Send more information than you communicate at your board meeting
Three things will make your board meetings run more smoothly:
- Send detailed material ahead of time: Send a detailed board pack two or three days before your board meeting. It should include financials, any big news, updates from across the business—and more detail than what you’ll actually share at the board meeting. When your board members feel informed with details ahead of the meeting, you can use precious meeting time for ideation and decision making instead of getting stuck in the weeds.
- Call each board member to discuss what’s coming: If you’re new to having a board and you’re still working out the quirks of your relationships, follow up on your board material with a phone call. Quick conversations can help you anticipate what’s coming, including questions and sticking points that should be addressed up front.
- Use document analytics to anticipate questions: Similar to your investor report, document analytics can let you know in advance where people spent the most time on your board pack. If you notice people lingering on any slide in particular, you’ll be able to better anticipate questions.