Managing investors and their expectations will be a sign of how well you’re running your organisation. Unlike your employees, they aren’t in the business everyday so their snapshot of your work will be when they see you face to face. The board meeting will be the one occasion when your investors will view you working, when they observe the strategy and progress being made towards it.
The key is for both you and them to get the most from these meetings. So, prepare carefully, get a good structure in place and deliver regular communication. Sow these seeds and your business will reap the benefits.
Venture capital investors may take board membership for the following reasons:
Hopefully you'll have venture capital backers who you can bounce ideas off and who will act as critical friends to your ideas, strategy and investment choices. Their role will be to review the performance of the business in line with understanding how well their money is doing.
They'll be keen to hear of operational matters such as employees, software, premises and product/service developments along with the impact of these items on the growth of the business. Ideally you’ll want active investors, who will look out for you and promote the business on your behalf to help take it to the next phase of growth.
We recommend you should aim for at least 1 every 6 weeks. The reason being 4 weeks can feel insufficient time for things to truly progress. Quarterly meetings on the other hand often end up being far apart resulting in too much time elapsing between one set of results/announcements and another.
Always factor in holiday seasons when considering timings for your meetings. Easter, late July, August, December and even early January are probably best avoided with investors and members of your team most likely to be on vacation.
In our experience, too often these meetings turn into a reminder as to what the product/service is and what your team is working on. You might cover all manner of things like new staff and the state of sales for example. Before you know it, questions are being asked on these items and the meeting descends into the minutiae details of such matters.
That might sound fine and to a certain extent it might help your backers but it won’t be of much use to you. Remember, these meetings and the benefits of them are meant to be two way. You want the experience, knowledge and insight your investors bring having run their own businesses and/or invested in others. This whole process is about much more than just raising finance.
Instead you should look at what the key items are in the business growth strategy that you (and your management team) are tackling and implementing. This should be no more than 3 things because 3 is after all the "magic number". It should also form the core communication in your report, containing enough information for VC investors to feel well informed.
When focusing on strategic items, make sure you concentrate on specific goals and results. Work with your accountant to set yourself and the business SMART objectives. This will then show you’re metrics driven and provide your backers with something quantifiable by which to judge the organisation and its performance.
Your report should be distributed to investors prior to the meeting because not doing so means you’re expecting them to react to news instantaneously. They won’t then have time to think and prepare which means you won’t receive the valuable input you’re seeking from them. They also won't appreciate shock or sudden announcements.
The report can contain plenty of the other details of progress, developments and updates in the business but your actual meeting with investors should only be about the strategic matters you have brought to their attention. Manage expectations by informing board members that the sole focus of these meetings will be the 3 key topics you’ve highlighted. That way everyone can get the most out it by helping shape the direction of the business.
In doing this you’re welcoming the input of investors’ opinions and their experience. Be warned though, like any crowd of people, you’ll have to manage the different personalities in the meeting. Otherwise the most dominant voices will be heard continually at the expense of others. So you’ll have to act as a facilitator, gauging all opinions on offer and making sure they are noted down so that everyone feels heard.
When it comes to your VC investors there's no such thing as over communication. If there are any significant developments relevant to the strategic matters you've highlighted, then these should be brought to their attention. Why? Your investors will likely have a depth of knowledge and experience for you to tap into, they’ll have their own network of contacts you can potentially connect with and they’ll have a vested interest in promoting your business.
Therefore the more they know about your business plan, strategy and the progress of the organisation, the more likely they are to pull for you outside of your meetings. If they understand your goals and KPI’s then the better they can apply their own skills in helping you achieve them. That means regular communication on the core strategic developments to keep them up to date and informed.
Your VC's may well have several investments, so who do you think they’ll be talking about and promoting to their networks? The CEO who just meets with them or the one that does this and is pro-active in keeping them up to date of how key objectives (as agreed in the report) are progressing, be it positive or negative news?
As part of this, ask for things from your investors. Might they be able to help you with a blog or mention you to one of their press contacts? Can they introduce you to someone in their professional network? Can they review your latest product or service developments? What direction did they or the other organisations they back pursue when at a similar juncture in the business lifecycle?
The more you engage with your investors on focused, relevant items then the more they will in turn engage with you and your business.
In summary, get the communication and board meetings right with your investor group and you'll find that they will really help in taking your business to the next level of development and expansion.
The content of this post is up to date and relevant as at 12/06/2017.
Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.
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