Obtaining funding is an enormous achievement not just for any startup, but it is the beginning of a difficult and long road. After you raise capital, the actual work starts: managing investor relations and fulfilling the expectations of those who purchased your vision. Excellent investor management will keep your relationship with your backers healthy, develop trust & transparency and increase your odds of getting future funding rounds.
Meaning of Post Fundraising
Post-fundraising is usually when a business has raised capital from investors (venture capitalists, angel investors, etc.). At this particular phase, the company concentrates on managing and using the funds it’s secured rather than seeking investment.
This post-fundraising stage is vital for several reasons:
- Meeting investor expectations: Investors have placed their capital and trust in the business and we must deliver on expectations by delivering the agreed-upon business plan and milestones.
- Managing investor relations: Remaining connected with investors through regular communication, transparency and accountability is key to keeping future funding rounds and support.
- Stratégic deployment of funds: The raised capital must be invested efficiently and strategically to allow for the company’s growth goals (product development, advertising, hiring and expansion).
- Monitoring/reporting: Developing good reporting and monitoring of progress, key performance indicators (KPIs) along with financial indicators are fundamental to show accountable fund management and progress to objectives.
Post-fundraising is the important time whereby companies must use the raised funds, meet investor expectations and get ready for long-term success and upcoming financing rounds.
Tips for Managing Investor Relations
For managing investor relations follow the below steps:
1. Establish Clear Communication Channels
Open & consistent Communication is the basis of excellent investor relations. Set up clear channels of communication right from the outset – so your investors understand the preferred means of contact and also the frequency of updates. This might include periodic email updates, quarterly investor calls or in-person meetings. In either case, be informative and consistent in your communications.
2. Set Realistic Expectations
You probably painted a picture of your company’s success and growth during the fundraising process. However, these projections must be moderated by reality for managing investor relations. Be honest about your challenges, obstacles and steps toward overcoming them. Investors like honesty and are likely to be supportive in case they understand the company’s trajectory.
3. Establish a Reporting Framework
Investors want measurable results and progress. Set up a reporting framework which specifies the key performance indicators (KPIs) you’ll use to monitor your company’s progress. This might include revenue growth, customer acquisition, product development milestones and operational efficiency. Give context and analysis to your investors and share these metrics regularly.
4. Accept Transparency
Transparency is an important element for managing investor relations effectively. Be honest about your company’s challenges and successes. If you go through setbacks or pivots, confront them directly and articulate your course in the future. Investors value candor and therefore are likely to be supportive in case they think they understand the company’s situation.
5. Use Your Board of Directors
Your board of directors may be an asset in managing investor relations. Keep your board informed & involved – they are the intermediaries between the company and its investors. Motivate your board members to go to investor conferences and also participate in interaction – their point of view & direction could be invaluable.
6. Promote a Culture of Accountability
Accountability is a prerequisite for investor confidence. Create a culture of accountability where everybody understands their part in making the company successful. Establish clear objectives and milestones and hold your team responsible for attaining those objectives. This can show your investors that you care about attaining your stated objectives and managing their investment sensibly and aid in managing investor relations.
7. Accept Feedback and Advice
Your investors bring experience and expertise to the table. Accept their advice and feedback and be flexible to constructive criticism. You might not agree with all suggestions, but considering various viewpoints can reveal possible blind spots or improvement areas. Create an atmosphere in which your investors feel secure sharing their insights – and are prepared to modify your strategy based upon their input.
8. Celebrate successes and Milestones
Keeping a realistic outlook is essential but also celebrate your successes & milestones. Show your accomplishments to your investors and how their funding helped your company develop. This way of managing investor relations reinforces their confidence in your team along with the relationship and feeling of collective accomplishment.
9. Manage Investor Expectations
Your company will face challenges and setbacks ultimately. And managing investor expectations is critical during these hard times. Be upfront about problems or obstacles and outline a route for overcoming them. Investors tend to be more apt to be supportive if you seem knowledgeable and confident you can deal with these challenges.
10. Prioritise Relationship Building
In the end, investor relations are about relationships. Make an effort to know your investors individually – their motivations, objectives & investment philosophy. Go to industry events & networking events – utilise these to meet your investors. A trust and understanding relationship can really help in managing investor relations and lead to ongoing support and investment.
Closing Thoughts
Managing investor relations is a process which requires adherence, openness and effort to expectations. Establishing distinct communication channels, transparency, realistic expectations, accountability & relationship building can keep you in a productive and healthy relationship with your investors. Remember, your investors are more than money-backers – they are partners in your company’s success. Treat them like this and you will have a better chance of obtaining upcoming funding rounds and long-term growth.
FAQs
- How frequently do I contact my investors?
No one answer fits all, but regular updates are recommended – at least quarterly. Some investors want more frequent communication so talk about your preferences early on. Consistency and transparency are required.
2. What info should I include in investor updates?
Investor updates ought to detail key milestones and progress toward goals, financial metrics and challenges and plans to address them. Include both quantitative data and qualitative analysis.
3. How to manage investor expectations?
Be upfront about realistic timelines and hurdles during the fundraising process. When funded, communicate regularly about challenges and course corrections. Set expectations and then manage them proactively.
4. How must my board of directors take part in investor relations?
Your board members could be advantageous conduits between the business and investors. Use their knowledge and guidance in investor communications, meetings and strategy discussions.
5. How do I keep in touch with investors through challenging times?
Transparency and open communication are required. Inform investors of challenges, give context and describe your approach to address them. Seek their advice and be accountable.
6. How to utilise investor feedback and advice?
Encourage investors to share viewpoints and accept criticism. Carefully take into account their suggestions and adapt your approach accordingly. They can offer invaluable experience.
7. How can I get ready for upcoming funding rounds?
Maintain positive investor relations through consistent communication, transparency and accountability. Celebrate milestones and show responsible fund management. Establish trust to boost your chances of getting future investments.
