Providing Value to Investors

This week's tip: how to provide value back to investors.

Building relationships is a common topic in this industry, but few explain how to create stronger and closer connections.

The key to doing so is by providing value back to investors. By doing this, they get to know you, trust you, and appreciate your efforts.

Before we get into the meat of the newsletter however, I want to make something abundantly clear:

If you want to have the opportunity to build relationships with investors, you have to make them want to carry on speaking to you. If you don’t do this, it doesn’t matter what you do, they will never give you the chance.

So, that's the first thing you need to focus on. But how do you do this?

1. Demonstrate to the investor that you have the potential to become massive.
2. Express your admiration for the investor and their experience.
3. Communicate that you have a growth mindset.
4. Show that you are already executing on your goals.

By following these four steps, investors will be excited about your potential and put you on their tracking list.

Once they are excited and want to continue speaking with you, you have the opportunity to carry on the conversation.

Here’s the 3 ways in which you can provide value to investors:

1. Your general expertise

When my fund backed Olio in 2018, CEO Tessa impressed us with her ability to build a fully remote team. This was completely novel in 2017/18 and gave us valuable insight into how it can work. She showed us the power of asynchronous teams and how companies can succeed in this type of work with the right expertise.

We had never seen before, and not only did it give us unique insights but allowed us to see that Tessa was a unique and successful company. It definitely played a part in why we decided to lead their round.

To truly stand out in the sea of founders, don't forget to focus on your unique insights and expertise in areas such as scaling, product building, culture building, or hiring. If you are doing something truly different and it's working, be sure to showcase it.

Be honest with investors and ask them if they have seen your type of working arrangements. Be confident in asking them if they think it will work or not, and show them why it's working for you. Create an atmosphere of discussion and play around these points.

The goal is to make the investor think differently and show them your expertise that they may not know or can discuss with you. This allows them to see what it would be like to be on your board, to agree/disagree with you, and how you communicate.

All important parts of building the trust needed to invest into you in the future.

However, please do not force it - this is only worth it if you truly do have something different.

2. Your domain expertise

This is the easiest, best, and most common way to provide value.

At the end of the day, an investor is investing in you. To gain their interest, show them recent articles that you have written or come across that are relevant and interesting. Find out what they are trying to understand about the market and assist them in their research. When I was still a VC, we even had founders sit on panels for us at events and pitch to us about a particular topic, such as synthetic biology or the future of telehealth.

Your goal is to determine what each investor wants to learn about your industry and help them improve their understanding of it. By becoming the go-to expert or founder in your industry, you make it 10 times easier to fundraise and attract investors who want to invest in your industry.

Another great example of this is a company my old fund invested into: Vira Health. The founder, Andrea Berchowitz has a TedTalk with over 1.6 million views talking about menopause at work (Vira health’s industry). She put this at the footer of all her emails, and my colleague who led the round explicitly stated this was a large part of why he loved the Andrea. Of course, I’m not saying you all have to have wildly successful Ted Talks to raise, but it definitely helps, and showing your domain expertise can literally be the unlock to a successful round.

3. Your network

This one is a bit harder – I get it. How can you show your network if you don’t have it necessarily?

Well, you have to think long-term here and start to actually do some major work. You should be thinking about building your network with:

• Domain experts
• Customers
• Angels
• Investors

If you can connect amazing people to investors, they will know you have a great network, which is a big reason why they invest in founders. Build out your network and don't be afraid to introduce interesting people to your potential investors.

To accelerate this process, consider organizing events or dinners with the type of people you want to connect with more. For example, if you're targeting Food & Beverage founders, create a dinner and invite as many of them as possible. This will give you an opportunity to meet and build relationships with these founders.

As I mentioned earlier, by asking the right questions, you can also find out what an investor wants and needs. Then, you can focus on introducing that investor to people who can help them. These introductions could be to leading experts you know or could be more personal or general. The key is to show that you know a lot of interesting people.