What is the role of a startup investor?

by | Sep 2022 | Early-Stage Capital

Investors are not creditors; nor are they friends. They’re coaches.

As an investor….

– Your job is not to back the winners. It’s to back the players and teams with the most potential, then help them to become the best versions of themselves.

– If you CAN’T offer support, that’s fine, but stay quiet. Don’t distract founders from focusing on what’s important.

– If you DON’T help, don’t be surprised if things don’t work out. Startup life is riddled with danger, and nobody can do it alone. Successful startups are invariably the product of a great team, investors included.

– If you CAN help, do. But don’t tell your players what to do. Your job is to create an environment where founders overcome obstacles themselves. Often those obstacles may be their own perceived limitations. Help them see what’s possible, then get out of the way.

– Hold them accountable. Set targets and milestones, then ensure they take responsibility. It’s easy for things to slip.

– Question their strategy. Founders often have nobody to challenge their ideas and strategies. It’s easy for them to make silly assumptions and mistakes. You’ll probably be surprised: founders appreciate being challenged more than you might expect.

– Remind them to experiment. Test > measure > learn > iterate. If it’s not working, ditch it and try something new.

– Introduce them to potential customers and partners.

– Help them make decisions. Fire fast, hire slowly.

– Connect them with investors, especially those that could lead or participate in subsequent funding rounds.

– When things are going great, keep them grounded. Things will probably get worse. What are they not thinking about? What parts of the business are being neglected? Where would their time and attention make the biggest impact?

– When things are bad, pick them up. Things will probably get better! Help them take action. Show them options. How can things be improved? What levers can they pull?

Being a founder is as lonely as it is difficult. Investors who think like coaches can make a massive difference.

What is the role of an angel investor?

Image credits

– Football coach photo by Alberto Frías.
– Tying shoe laces by Adrià Crehuet Cano.

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