Don’t abandon founders in times of austerity: 3 ways to support your portfolio
How you as an investor react to and treat your founders in a downturn will determine if they will want to continue working with you.
A dark cloud is forming on the horizon for startups and investors. Big firms have announced they’re cutting back on investing in startups; Y Combinator is advising founders to extend their runway; and top venture capitalists are preaching that startups have to survive before they can thrive.
While it’s easy to get bogged down by the prevailing doom and gloom, investors have to stay focused on what matters most: founders. The state of the world is going to make the people at the helm feel nervous and seek extra support, especially from their investors.
We’ve been seeing a shift toward value-driven investment for a while, and now is the time to put your values into action. Naturally, investors will have their own issues to navigate, but losing sight of founders’ needs will cost more down the line.
Investors now have to demonstrate consistency, transparency and longevity more than ever. They have to prioritize people, not profits, as the downturn takes hold. Below are a few tips on how to best help your founders through this rough patch.
Austerity calls for investors to be more attentive to their founders, and that will only serve to improve relations.
Consistency: Be the investor your founders are familiar with
Your founders chose you because of what you bring to the table, including your experience and how you communicate. When the road gets rocky, you should reassure them that you’re still that person.
Unexpected changes in your behavior could scare founders and make them feel like you don’t trust them. If you’ve adopted a hands-off approach and encouraged them to make their own decisions, don’t suddenly begin micromanaging. Likewise, if you normally only check in with them on a monthly basis, don’t start requesting weekly meetings.
Judge the amount of interaction that will best serve your founders. One of our companies is currently closing a round, and rather than chase them for updates, I messaged the founder simply saying, “Hey, I know this is hard. I’m here if you need me.” I put the ball in their court if they need to reach out.