When one of our startups is fundraising for a new round, the investor candidates who they reach out to often get in touch with us to get our take on the business. As existing investors who have been involved with and are familiar with the company for at least a year, investor candidates want to hear our perspective in areas like the strengths and weaknesses of the founders, the future of the market, competition, and the appropriateness of the size and usage breakdown of the funds being raised.
In the past, I used to prepare for these conversations by writing down my thoughts on the business and referencing these writings during our conversation. Recently, I started doing something different. In particular, I now share these written thoughts with the investor candidate over email prior to our conversation.
This achieves three goals.
First, it anchors our discussion around the key issues which pertain to the company at hand. These issues are usually presented in a more scattered manner in the company’s presentation and this makes them more difficult to digest. We know what matters to the company right now, which isn’t necessarily the case for the potential investor. By directly zooming in on what matters, we save the investor a lot of time trying to distill what’s essential and what’s not. Investors appreciate this.
Second, our actual conversation is much more productive. Rather than spend the first half of the conversation going through the notes that I had prepared, we’re able to dig into the specific key issues in these notes which the potential investor wants to talk about. Often times the potential investor agrees with my reasoning on most of the key issues and has a different take on one or two issues. We then talk through why we have a different take on these one or two points which are often crucial in determining the investor’s ultimate investment decision.
Third, sharing my written notes about the company prior to our conversation shows that I’ve prepared for our talk. Although I would also prepare in the past, the potential investor didn’t know this because I hadn’t shared my written thoughts. Being prepared shows that I care about our conversation and potential investors appreciate this.
For each of these three reasons, I’ve found it very effective to share my written comments about our startups before talking to new investors evaluating these startups. I’m going to stick to this habit.