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“Making money is an incidental consequence of having strong relationships.”
Think about that for a minute. It should help you overcome some of the barriers that you may have put up when delaying building new relationships or improving your current ones.
As entrepreneurs we have a tendency to focus on product, market, profit. All of these tenants are important, however they are all derivatives of the relationships we build and nurture along the way.
First let’s give some love to Ray:
The Ray I speak of is none other than Ray Dalio, the Principal and CEO of Bridgewater Associates — the world’s largest hedge fund. He helped me rediscover this notion in his latest book called the “Principles: Life and Work”.
Ray argues that we should assign relative value to things that we want (including money, work, and relationships) and weigh them properly. He sets a higher value to work and meaningful relationships over money because “money” was less meaningful since it is a derivative of the two, i.e. the relationships you build will help you achieve meaningful work and working with them will help you build your wealth.
Startups that raised money from investors, let me explain.
After knowing your investor for a few short weeks before s/he cuts you a check, you have to understand that you are signing up for, at least, a ten year commitment or something akin to a marriage.
Your investor/s have a ton of value to add besides the money that they fund you with and whats more important to acknowledge is that they have a vested interest in your success.
You’ve know an investor for a few weeks before they wrote you out a check, you will be married to them for ten years.
The values that investors bring to the table.
[1] Advice and feedback— Skip a few challenges and ask your investors how they’ve overcome them in their own career. Either they have experienced what your going through before or have seen similar challenges that their other portfolio companies have overcome and will share that with you as a common curtesy. All you have to do is ask for help.
[2] The network effect — Your investors have cultivated a big network over their long career and can introduce you to clients, key hires, other CEO’s they’ve backed and when you are ready to new investors.
[3] They are your evangelists — People talk and brag and your investors are no different. They are a great lead gen for your business and want to share your trials and tribulations with their network.
Strong relationships help you create more wealth
How do you build a strong relationship with your investors and increase your companies valuation.
[1] Keep them in the loop (link to an investor template) — In other words keep them updated on your startups progress. For early stage companies, once per month should do it and companies that are a little older, quarterly updates and a few phone calls will make all the difference.
[2] Ask them for help — This can be around intros to folks in their network, around challenges you are experiencing and reviewing some of the materials you are about to publish. They love being engaged and telling them that everything is peachy is not something that will peak their interest.
[3] Lastly, you want to reward them. The way you do that is include a kudos section in your investor update. They love having other investors in your cap table seeing how helpful they’ve been to you because they, too, are trying to get credit from other investors on your cap table.
To leave you with something that really inspires me to continue to writing these posts, here’s old Teddy with some truth bombs.
I’ve been in the startup game for the last 15 years and I know how investors digest information and how founders lag in providing it. We’ve built a bridge for founders and their stakeholders at AngelLoop because succeeding in your business means being able to build meaningful relationships with people that have a vested interest in your success. Don’t be a {enter derogatory term here} and instead be pro-active with your stakeholders because they will return the favor. It’s a way to stress test your thinking and increases your odds of making the best decision possible.
That’s all from me for now, check out our other posts or follow us on the Socials.
I love you,
Igor @ AngelLoop
P.S. Why is 2018 the best year to fundraise for your company?
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