Beyond The Check: The Relationship Between Investors And Startups
5 min read time
After months of hard work to secure funding, entrepreneurs can finally take a breath when the money hits the bank. But once the check has been written, the most interesting—and rewarding—part is to come.
While I've observed hands-off firms that offer their name but avoid board seats are gaining momentum, as an early-stage investor in climate technologies, nothing is more important to me than providing support to the very leadership teams I put my faith and capital behind.
With new hurdles around every corner, investors can step in to guide young startups to commercialization and shape the ethos of the company, resulting in a win-win for both. According to a study from Harvard Business Review, investments by well-managed corporate venture capital firms can perform better than independent VC firm investments.
But what do investors need to do to be considered “hands-on?” As a venture capitalist who has guided dozens of early-stage companies across the chasm from early research and development to high rates of growth and exits, I’ve found these six areas to be most important.
Be a cheerleader and a coach.
Instead of reaching for the stick and pushing entrepreneurs to reach the next milestone, dole out carrots (a.k.a. support) to build a foundation of trust. Something I tend to ask the CEOs I work with is, “How are you sleeping?” As simple as it might sound, the response can provide an accurate glimpse into their well-being.
Investors have to know their CEOs and understand when to push support, such as interviewing a key new hire or waiting for the pull. Amid various challenges, investors can serve as a sounding board and build a culture where asking for help is not only accepted but also expected. For example, as part of my strategy and responsibility to my portfolio, I provide a third-person perspective on the market, company and team in a way that encourages practical problem solving without sacrificing wellness.
Bridge the hiring gap.
Even if you are working with the smartest founders in history, a tiny team is always going to need help with responsibilities that range from go-to-market to human resources to marketing to finance. It might be hard to figure out which shoes need to be filled and in what order, but that’s where hands-on investors can provide insights.
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