A no-nonsense guide full of war stories and best practice on startup investor relations. Based on in-depth interviews with 100+ Founders and Investors.

The Investor
Relations Field Guide

The Investor Relations Field Guide

What’s the best way to communicate with my investors/portfolio companies?

It’s a common question, often asked off the record over post-work drinks. We all understand that there’s no cookie-cutter approach when it comes to relationship building - but how is valuable information being explored, shared and discussed through the startup ecosystem?

After interviewing over 100 investors and founders, we discovered real gaps in the information available around best practices for communicating with investors - both sides are left wanting. Founders are disappointed with the level of help they receive vs what was promised, and investors aren’t getting the key information they need to provide that help.

We spoke with leading investors like...

- And many more investors and angels -

Why a guide like this now?

Consider the current investing environment - continuing fallout from the Covid-19 pandemic has created a bearish landscape for many, with growth targets being missed, staff at risk and funding running out. There is still cash to be invested, but in uncertain times, this may go straight into companies already in an investor’s portfolio - and not all of the existing investments will make the grade.

With remote working the only option for many, founders and investors are having to be extremely intentional and up front with every decision they make. Desperate times (or big opportunities) call for rapid decision-making, yet founders are slowed down by second-guessing, while investors struggle to prioritise limited resources across their portfolio. 

Risk appetite is undoubtedly down, while the barrier for qualifying investment criteria has shot up.

Effective communication, collaboration and alignment has never been more important, but confusion abounds in terms of best practice. We took it upon ourselves to come up with a conclusive guide, for both founders and investors to stay front of sight and top of mind as they communicate throughout their relationship. 

We also spoke to some amazing founders...

Stage of Startups Interviewed

Average Funding Raised

Average Team Size

How to use this guide

This guide features the real experiences of more than 100 investors and founders from Silicon Valley and across Europe, who spoke to us over the course of several months. Through those interviews, key challenges, experiences, ideas and resolutions were discussed. 

We split those into chapters covering the founder/investor relationship - from those early days, to building a board, to navigating difficult conversations and reporting necessities. Aside from quotes and best practise, each chapter has a short summary  and extra resources we found useful to deep dive into the section.

The importance of communication and frank discussion cannot be underestimated - and it’s a key thread running throughout each anecdote you’ll read here. 

Every startup begins life as an idea, and in the end, aims to become a public company in terms of management structure and communication. It’s a tough ask, when your monthly board meeting takes up 12 days of the year, compared with the other 353 you spend engaged with your team, operations, product and day-to-day firefighting. But just as founders need to scale their technology and operations as they progress and grow, so too should they be thinking about scaling up that professionalism when communicating with investors. 

Whether you want answers to a short-term difficulty you’re experiencing, or want to truly understand the evolution of the founder/investor relationship, use this guide as your starting point.

Investors, we hope these lessons help you work more collaboratively with your founders and engage more meaningfully with your portfolio companies.

Founders, we hope you find the tools to approach investor communications within the following pages and feel empowered in those conversations.

About the author

Kosta is a serial entrepreneur that specialises in product and growth, helping early-stage businesses find product-market fit and scale. Over the last 9 years, he has launched ventures across London, Berlin and Hong Kong working with both startups and corporate venture teams.

For Kosta this field guide has snowballed into building Kalipr.

Quotes

Some Soundbites So Far...

"

It’s important that founders take Investor Relations seriously. Often founders don’t see the importance of this until it’s too late, and on a few occasions have had to kick the CEO out of the company.

Angel Investor

"

Getting product feedback from investors is quite tedious, I know you're trying to help, but you're not my target audience.

Seed Stage Entrepreneur

"

If you're a company that's very infrequent with your communication or I do not hear anything at all, you're missing out on my support. I will then either chase you or forget you.

Angel Investor

"

It's not your job to be a good news machine. I have seen so many founders scared to communicate negative news - but often these are the best people to help if things aren’t going well.

Series A Entrepreneur

"

Investor feedback is valuable, but recruiting, sales, and building a great product are more valuable.

Seed Stage VC

"

There are certain things that you need to do as a founder. Investor updates are one of them. Suck it up.

Corporate VC

Chapters

1. A perfect match? Finding the right investors

2. Perfecting your due diligence routine

3. Growing pains: Getting into a cadence of communication

4. Call me? Reporting on the stuff that matters

5. SOS: Asking for help and leveraging your VCs for more support

6. Building and maturing an exec board

7. Dealing with the fallout: Arguments, faux pas and relationship killers

8. Moving onto bigger things: Raising the next round

9. Help me, help you: Achieving that harmonious partnership

10. Ackowledgements

CHAPTER 1

A perfect match? Finding the right investors

There are a whole bunch of awesome resources out there around finding the right investors, but it would have felt incomplete not to at least share some of what the founders we interviewed mentioned about the hardships of fundraising and finding the right investors and partners.

Deciphering who is going to add the most value to your startup at different points in its lifecycle is a constant hurdle to overcome. You need cash, but probably shouldn’t just take it from anyone waving a chequebook in your face.

Angels, VCs, corporate VCs, Family Offices; all can offer a unique perspective, skills and value to your business, but in the long run it often becomes more about the person investing than the amount they invested or the valuation. As one founder at Series A stage told us, “The most valuable investors sometimes come with the smallest tickets.”

Early on in the company’s life cycle there are temptations to lure founders away from smaller, stable investments, says one seed investor. “One of the biggest challenges is founders raising too much - the overhead that creates is really painful,” he said. “Also the delusion of success and dilution of the cap table can be real challenges.” 

“Venture doesn’t work for most people. It kills more people than it doesn’t.”

A second angel investor agreed that founders can get ‘charmed’ by investment numbers offered by some VCs as they grow - only for the investor to walk away at the last minute: “If it sounds too good to be true…[it is]. It tends to be newer funds [to look out for], but this kills a business - we had two as angels fail. If you’re a principle-led founder sometimes it’s hard to walk away if you’ve invested heavily in the relationship.”

Angel investing shouldn’t be all about the money on either side, one investor adding 4 or 5 companies to her portfolio per year, told us. “When I invest, I don't want to just be a name on the cap table - I want to contribute,” she said. “If you're in angel investing just for returns - you're in the wrong f-cking asset class.”

A lot of time angels feel like ‘gap fillers’ with what's left at institutional funds, one such investor told us. He suggested founders “pick angels that you know will help, and use [their] network to [your] advantage.”

What stage investors did we interview?

We spoke to one seed investor who is ‘technically a CVC, but a lot more independent’, who said his investment processes work in a similar way to angels. “We tend to be asked [questions more] as observers, and tend to be most useful to Seed to Series A [stage startups]. Most of my involvement is organic - I try to move with what happens, and I am open with founders,” he said.

Family Office funds are among the toughest to raise - it’s virtually impossible without a close relationship to said family - but they can reap the sweetest rewards. “The value of a strategic family office can be a game charger - literally £10m plus worth of deals came back from them,” one founder who has so far raised £3m, said.

Another founder, who has raised £1m at seed, told us he’d found the ‘needle in a haystack’ of investors, with a family office running an evergreen fund. “They are like great angel investors that are helpful when you need them to be, and help you sell,” he said. “I’ve been really impressed with how they've [managed] everything throughout the Covid-19 [pandemic]. They’re a former entrepreneur, and more friendly.”

Similarly, VCs with a background in your startup field can be extremely valuable investors.

“Look for investors who have ‘entrepreneur empathy’”

suggested one founder. These former operators may ask for more involvement, a board seat or higher equity stakes, but their experience (and investment) can pay off, big time. Although the challenge is sometimes making sure they accept it's not their business

And career investors? “The career VCs have some utility but as an early stage founder, I am yet to find it,” admitted one founder, fundraising at seed level. “They haven't sold, they haven't built, they aren't a customer. The less you know, the more humble you should be.”

The same founder had a poor experience in working with a so-called value-add investor. “They pushed really hard on the valuation and really under-delivered in terms of their support. They hit me hard on my founder salary, but with a family to support, how can I operate effectively [without adequate pay]?”

The temptation of a big name VC can be tough to turn down. In many cases, it’s not that tier one VCs add more value - in many cases, it’s the opposite, given the weight of their existing portfolios. But the brand name, professional appearance and wealth of experience is nonetheless an attractive proposition.

“Corporate and family offices push more for us internally, and look for where they can make a difference outside the boardroom,” one Series A level founder explained. “If your investors are ex-financiers, it’s hard not to be data informed and data driven.”

One seed investor acknowledged that “if the company bled, the [corporate investor] could invest at a good rate”.

Another seed investor said corporate LPs were the ‘ideal investors’. “[They] participate in larger deals and sidecar with corporate partners,” he noted.

Like it or not, size matters. Just because an investor might be the most relevant to the founder by producing the biggest cheque at the last round of funding, doesn’t mean that company is relevant in their portfolio. The value-add a founder receives might be minimal if they form just a tiny part of an investor’s portfolio. 

How many companies did investors have in the portfolio?

One Series A founder who has raised £5m highlighted the lure of bigger cheques coming from across the pond. “We had a US investor who got excited and made a big offer but they didn't know what they were doing - they tried to change the deal and back out. Good valuations from shitty investors are not worth it.”  Investors who are afraid to commit can be a hammer-blow to a fledgling business.

However, a herd mentality helps drive the process faster, there’s brand recognition, and the big corporates undoubtedly have some advantages - one Series A level founder told us that although they ‘have their own agenda’, they do add value.

Sources from which you raise your cash will often depend on how far along your process you are. Circumstances are often fluid for a startup, and as they scale, expectations on both sides change with it. Ensuring incentives are aligned, where everyone has skin in the game is vital - but things can get complicated in tough situations when new pressure points are introduced. 

We’re all players in a mythical landscape - VCs are busy hunting unicorns while founders are trying to discover that mystical value-add investor. Realistically, it’s finding the person who is aligned with what you’re doing - and understanding each of your pressure and pain points.

“The first role of an investor is do no harm”

one Series B investor told us. “Help where you're needed. VCs should get involved when they can add 10x [the] value at one fraction of the effort. Keep people in the loop and be proactive in communication.”

Chapter Summary

  • Find people you trust and the person you’re working with can be much more important than the fund
  • Each investor type has different pros and cons and it’s worth really spending time to reflect what you need
  • Most serial entrepreneurs admitted to us, money is money. Get what you can and build your business.

CHAPTER 2

Perfecting your due diligence routine

It’s the dreaded getting to know you (and your paperwork) stage of the process. But it doesn’t have to be a minefield - clear communication, honest interactions and being upfront about any skeletons in the closet early on can save a lot of time and hassle when it comes to due diligence.

Communicating throughout the initial stages of the investment process is key - you won’t match with everyone. Some won’t like your style, your ideas or plainly, you. Others will jump to have you as part of their team. 

Several founders that we spoke to noted that there are only three useful answers to receive investors when trying to source investment, and in this exact order:

  1. Yes + why
  2. No + why
  3. Maybe + when 

It may not seem it at the time, but a firm ‘no’ is a lot better than a ‘maybe’ for a founder, as you can stop wasting your time. A ‘maybe’ with no deadline can be a silent killer for many startups. 

Once you arrive at the point of due diligence, it can be daunting to work out exactly what you should be asking, and of who as a founder. And yes, you should be “running as much due diligence on your investors as they do on you” said one angel investor.

When you do get to this part of the process, there are several things founders should be asking their prospective investors, says one angel investor.

What was the average AUM across funds? 

“Always ask if they have dry powder left - with angels you have to be quite forceful about timelines and decisions,” she said. “Run a process; the more support you have around you, the better - other founders, angels, lawyers.

And always ask to speak to an [existing] portfolio company - most VCs are really happy to do that.”

The more honest you are as an entrepreneur, the smoother the journey, she added. “The best founders tend to be upfront. A lot of the time it’s about team dynamics. I want all the dirty laundry [straight away], [rather] than find out later - that’s the death of an investor relationship.”

Similarly, one founder at Series A stage advises his peers to conduct in depth due diligence on their investors. “Ask why [they] want to invest specifically,” he suggested. “ [For us], having advisors to navigate this path makes it easier.”

And it’s not just the portfolio company or investor that needs to be the key focus of due diligence.

One investor told us how a co-investor ‘completely f-cked’ a company they had invested in when they joined the board: “We should have done more due diligence."

"Now, we do as much due diligence on the co-investors as the company.”

Several founders and investors emphasised that it's through the due diligence process that you’ll find the sought-after alignment - and although alignment doesn't always mean agreement, trying to force a relationship when you can’t overcome obvious red flags on either side is a terrible idea. 

If you can, walk away and find a better match. Or if you have to take the money, know up front what you’re getting yourself into, and accept the consequences of this decision early on.

Chapter Summary

  • Don’t settle for a non-committal ‘maybe’ when waiting on an answer from potential investors. Push for a yes or a no, however painful it might be.
  • Due diligence isn’t just for the company or investor you’re working with directly - think about who else could impact decision making, and question them, too.
  • The due diligence process is where you’ll find alignment with the right investors, but this doesn’t have to always mean agreement.

CHAPTER 3

Growing pains: Getting into a cadence of communication

You’ve finally found your investor match or latest portfolio addition; you’ve conducted the due diligence, money is in the bank, the future looks rosy and you’re excited to move forward with this new relationship. But how do you set a realistic precedent for communicating and keeping track of progress? 

“With difficulty!”, admits one investor with 30 companies in his portfolio. “We prioritise continuously - and spend time with the ‘good’ ones.”

One angel investor told us the perfect relationship with their portfolio companies should be...

‘close enough to be a trusted partner, but not too close to interfere with the operations’.

“If you become a teacher - a lot of founders get frustrated,” he said, adding that he was happy if the company shared the narrow scope they used to run the business, and offered monthly reporting. “We all need to speak the same language.”

From our conversations, it would seem that it’s largely the investors driving the communication in the early days. This makes sense: it’s their cash at risk. Several investors said they checked in ‘daily’ with their founders, and the majority said they were available ‘all the time’ via informal channels like WhatsApp, iMessage or Slack. It’s more of a parental relationship than a marriage in the early days, it would appear. However, some founders did emphasise that “the always-on” instant communication with investors can actually be quite stressful. 

“The fact that I communicate regularly with my investors gives me a long noose,” noted one founder, who has raised $17m.

“Founders should phone their VCs and talk about their problems with a relevant investor,” said one seed investor.

“There are certain things that you need to do as a founder and suck it up. Investor updates are one of them.”

Just as founders suffer with mental health challenges and imposter syndrome, “a lot of investors also feel like they have imposter syndrome” shared one VC. Ultimately everyone wants to feel included and be helpful, and they can only do that if you keep your investors in the loop.

“Most startups get distracted by reporting and metrics and bullshit. The art is finding product market fit at the early stage, this is all that matters. To be accountable, you need to set goals and have a vision. Have fortnightly calls on metrics or focus on experiments and get back to fundamentals.”

Several founders told us that they ask for an opinion from investors just to ‘make them feel important’. “Lengthy email essays go straight to the back of [my] inbox,” one added.

How often  do founders send investor updates?

From the industry experts we spoke to, the ability to be adaptable, flexible and responsive seems to be at the top of the agenda. At the beginning, it may be the investors chasing the founders for progress, but when a problem arises or the company enters a new stage of growth, communication between both parties will naturally balance out.

“Things change as [the company] grows,” observed one founder, who said he really appreciated the close contact with his VCs in the early days. “It was helpful to bounce ideas off the VC when [there were only] three of us at the start of the company.”

Just as you on-board beta customers, you should on-board early stage investors, especially if they want to be more active. Agree on your communication styles, channels and cadence early on. Assess the roadmap, risks and resource allocation ahead of you, and keep those channels of communication open as you both grow.

Chapter Summary

  • Clear, consistent and well crafted communication separates the good from the great
  • On-board investors and align on communication channels and frequencies early on
  • Communication will adapt and evolve as the relationship does - make sure you’re both flexible enough to move with the times

CHAPTER 4

Call me? Reporting on the stuff that matters

You’ve done the hard part; you’ve secured the cash or the portfolio addition that you were looking for. But now comes the next challenge - keeping everyone happy with relevant updates.

The metrics used to keep track of a portfolio company’s progress differ from investor to investor. A whole flurry of acronyms can sum up the many ways investors like to track progress - KPIs, CAC + LTV, GMV, OMTM… but for most, a monthly update is sufficient, the contents of which need to be hashed out between both parties early on. 

One of the best strategies that many of the serial entrepreneurs we interviewed recommended is to write the deck for your next round as soon as you close this one and agree on a North Star metric and expected growth. You can then add in any specific metrics and measurables that each party wants to see on top of that.

“The metrics we use depend on the business - you need [relevant] data to be able to ask the right questions,” said one investor.

“We can over-document and over-tool all the dashboards so we cannot make decisions. Less is more.”

This pre-seed/angel investor agrees. “If they want to share metrics I want the important ones,” she said. “It's about effective communication - not reporting.” This more relaxed approach keeps everyone honest and takes the pressure off, she added. “Teams trust me about the bad and the ugly - the relationship is there.”

Some investors feel they have to push for the information they need. One seed investor said that ‘90%’ of the companies he worked with were bad at keeping him up to date. “If they’re pre-revenue, [we need to be aware] of their pipeline and engagement.”

“If I invested in a company I want to drill down in the dashboard,” said another angel. “Some founders really need to be pushed about metrics; sometimes it comes from a lack of knowledge, [and] sometimes it comes from embarrassment because the numbers aren't great.”

One common response we received from investors was that they preferred more frequent, concise updates - but the timeline is subjective. One investor said that the best founders ‘generally keep me up to date monthly’, whereas another argued that ‘if you only [see reports] once a quarter, you end up having recency bias’.

Managing expectations on both sides is key - you might be happy with a monthly call, they may want weekly communication. If contact levels are a dealbreaker, this needs to be communicated and compromised on long before you sign on the dotted line. Top tip: don’t ignore those calls for too long.

“It’s the companies that are ‘all over the place that I need to deep dive,”

said one investor, with many more in agreement that when the communication from a founder stops, the call volume goes up.

And if phone calls aren’t your thing, a few founders and investors have recommended telegram as a more informal channel that’s separate to non-work communication that lives in WhatsApp.

Airtable had a lot of fans from the investors we spoke with, with Trello’s Dealflow another highly rated programme. “Data and venture is a competitive advantage,” said one pre-seed/angel investor. “We believe being well organised and structured with data is what we need to do to succeed for our LPs, and differentiate in the market.”

Ultimately, the best founders appreciate that investor updates are not really about the investors. This is your chance to get your head out of the weeds, stop firefighting for a second and reflect on where you’re at, what’s going well (and should be celebrated) and where there is room to improve. 

Use the time to lean on your investors’ experience, and appreciate the chance to take a wider perspective on what your company looks like.

Chapter Summary

  • Monthly updates are best - stay top of sight and top of mind
  • Pick a standard template and be consistent
  • Founders should report more for themselves than for their investors

CHAPTER 5

SOS: Asking for help and leveraging your VCs for more support

Unsure about how to manage a fallout, or put out the latest fire on the horizon? Here, we detail how to have those tough but necessary conversations.

Communicating effectively is the best way to avoid any unexpected surprises on either side, and it’s inevitable that founders will need to lean more on their investors at certain points of the company’s cycle.

Sharing bad news with stakeholders early is key. Although painful, the earlier you have the difficult conversations, the better. Often founders will wait too long to share bad news, in turn making it harder for investors to help - “they have less runway, less energy and less buy-in.”

Investors seem fairly unanimous in encouraging founders to call with an issue.

‘Don’t be afraid to over communicate’

said one, while another urged, ‘If something bad happens, call me - don’t wait.’ But this might be easier said than done for a founder determined to focus their energies on problem solving without alerting external parties.

One seed investor acknowledged that asking for help was hard for many founders. He suggested: “You need to create a safe environment and coach them on how to ask for help. If I wait for them to ask for help it's too late - I want to be in the trenches with them.

“I’ve seen so many founders scared to communicate negative news - but often these are the best people to help if things aren’t going well,” added one founder.

“It’s not my job to be a good news machine - [founders need to be able to] communicate the bad news too.

Another angel investor said that in her experience, some startups simply don’t want assistance from angels. “They don’t value the expertise,” she said. “Sometimes they have advisors [that] step in instead of investors. That [can make it] difficult when they come to raise their next round.

Some founders are grateful for advice. Several told us that one major value-add their investors can offer is to help them with senior hires. Using investors to interview potential new recruits is a great strategy - it helps reassure and excite new team members that the startup is a good career choice.

Being ‘founder friendly’ has become an important aspect for many leading investors and from the interviews, it’s clear that this now goes beyond the term sheet, it’s about value add once you’re on the cap table as well.

However, some founders recoil at the thought of interference. 

Several founders exclaimed that some of their investors only pay lip service to support. When they had ended up sharing bad news, often investors would sink their teeth in and want minute-by-minute status updates of the problem or worse, disengage completely.

One investor joked that “the perfect investment is one where you put money in, not hear anything from and then get a cheque in 5 years when they exit and return the fund.” 

Probably the most common test of the founder and investor relationship is the pivot. It can be tough for both founders and investors to get on board with this. Founders might forget that investors don’t operate in the same business the same way, so will likely need time to get up to speed and understand the pivot. Or worse, just because one investor is on-board it doesn’t mean that everyone else is.

Again, the question of career investors vs former operators as VCs raises its head. Past operators, be gracious enough to understand that past experience may not fit exactly with the current situation you’re trying to fix.

“As a founder you often don't want to have a boss so sometimes it becomes an ‘us versus them’ [scenario],” admitted one founder. 

If all else fails, peer group support could play a big role.

“People don't seek [out] help day to day - taking a network approach can really help,” suggested one angel investor. “Success breeds success, so maybe more successful companies [should] talk with each other more.

Chapter Summary

  • There are clear things investors can really help you with: fundraising, recruitment and sales
  • Over-communication is better than under communication
  • Because of power-laws it’s easy to be pushed to the side if you’re not doing well by investors. But if you have invested in building a strong relationship, this is when you get the returns as a founder.

CHAPTER 6

Building and maturing an exec board

Who should be on your board? What should you discuss? When should meetings be held? Here’s our deep-dive into structuring your board:

Communicating at board level brings about many more challenges. One company’s board will look completely different to the next, and so they should - different startups, stages and people mean there is no blueprint for how your board or meeting schedule should look.

Most repeat founders and seasoned investors agreed that a company should generally consider building a formal board in the run up to Series A, however, deep tech companies can have them much earlier to provide commercial structure.

However there was one phrase that we heard several times during our interviews in relation to exec boards - ‘pale, male and stale’. Building a diverse, strong leadership board is imperative. You need people who will ask the right questions, assist in tough times, represent the true nature of the product you’re trying to create, and crucially, keep you out of legal trouble.

With these aims in mind, it won’t always make sense to have your investor on the board - and much of the time, they might not want to. Being open and honest about why an investor should/shouldn't join the board is a key, and often uncomfortable, conversation to have.

Of the investors we spoke to, the majority said they did not require a board seat with their investments. Too much admin, additional legal responsibilities, and the idea that ‘if you do it for one company, you have to do it for all of them’  were among the reasons cited. However, in lieu of a traditional seat, many said that they required the option of an observer seat instead.

One pre-seed to seed investor identified that boards weren’t always the right structure for early stage startups. But even if that’s the case, “if we’re putting in £2m, we want an observer seat,” he added.

Is a board seat required? 

Most investors acknowledged that they should only be on the board if they added value, and that in the early days, the function of the board should be helping the leadership ‘get out of the weeds and view things in the medium-long term’.

One founder advised his peers to bring on board members “aligned to what you want, especially when you pivot. They might not be pivoting with you”.

Several people noted that a board should be flexible, reviewed frequently and, as one investor said, easy to change: “The board you have when you're in year two should not be the same as the one you have in year four”.

The larger the round and the later stage the company, the more VCs will want board seats - it’s the tool for control and influence. “The closer you are to a public company, the more you have to start acting like one,” noted one investor.

It’s vital that when someone stops adding value to the board, a frank discussion is held to work out the best course of action for the company. One interviewee mused about how to get investors off the board once they’re embedded, adding that

some VCs in Europe ‘cling onto boards like vampires’. 

At around Series A level, it may be worth exploring the idea of hiring an independent chairperson to the board to help navigate complex situations, bring in extra credibility and open doors to the next round. They can also help steer the ship, be an ally to founders, push back on VCs and support with the admin overhead that an executive board brings.

The board can be a good place to deep dive into financials, forecasts and company direction - one investor told us it’s ‘the only place we can have influence’. However some argue that it’s a function that could be cut altogether. One founder complained: “There is no deck or pre-read agenda - it’s just a meeting.

It's a relic of an activity that lives from public companies.”

One trend many investors and founders noted is that board meetings are frequently being used as a reporting mechanism. While some welcome this as a time-saver, most aren’t keen to use the time to go over reports, and suggested that updates should be sent in advance and assumed to be read before the meeting starts. 

Productive board meetings should be short and sweet. “Boards force you to structure your quarter and structure your cadence. If you have more than three action points from a board meeting, you're never going to get anything done,” said one Series B startup. “Keep it to one bullet point per metric.”

When you have a few well-known names on the board, there’s always the potential for egos to get in the way of business.

It can turn into a “d-ck measuring contest”, said one founder, as VCs try to outsmart each other.

“One really good tactic I have found is to use the board as a momentum machine for the rest of the company,” said the founder. “ You can also bring in senior members of the team so they can grow, learn and show-case what they have been working on - it’s a real morale booster.”

So what does a good and bad board meeting look like? One investor told us:

“A great board meeting - [we had] an exited founder to manage the board. They understood the risks and timed everything well; there were strong follow ups and a call with other investors for our input,” she said. A bad board meeting leaves you with a far less positive mindset - you’ll walk away with a serious to-do list, VCs don’t hear anything for a long time, and there's no follow up at all, recalled the investor.

“The worst board meetings are not productive - it turns into a dog and pony show,” added one seed investor. “It’s the work in between the meetings that counts.”

Chapter Summary

  • The larger the fundraising round and the later stage the company, the more valuable a board seat will become for a VC keen to exert some influence 
  • Send the deck to the board three days in advance. Keep it to three discussion points max
  • Great board meetings feel like collaborative whiteboard sessions

CHAPTER 7

Dealing with the fallout: Arguments, faux pas and relationship killers

Things don’t always go to plan. With any professional relationship, partners will likely unintentionally jeopardise their positions or fall foul to various pitfalls. Here’s how to navigate disputes without taking a wrecking ball to the business.

For some founders, the first round of fundraising can be their first major leap into the business world. They may never have needed to forecast financials, sales, and manage both a team and the expectations of people whose cash they depend on.

Taking the time to evaluate and perform due diligence on potential partners in the beginning is never a waste of time - it’s a fundamental part of your business structure and it really matters when things go wrong.

Co-founder disputes can be one of the messiest things founders and investors get dragged into. Sometimes investors can be used to mitigate the situation - but this is another instance in which a good chairperson can come in handy. They can act on the founder’s side, whilst also looking at the company’s interest.

Replacing the CEO of a company is a rare but incredibly stressful occurrence, according to the conversations we held with investors. However, when it does happen, it is out of necessity and a duty to put the business first.

“As investors we have to protect our investment, which is looking at the interests of the company more than those of the founders,” said one investor.

Sometimes, noted one investor, the challenge is that the need to replace the CEO isn’t due to malpractice or negligence, but that the company has outgrown the founder. At this point, the company’s best chance of success is to introduce new leadership to continue its path to growth, and difficult decisions need to be communicated.

As time progresses, an obvious souring point for the founder/investor relationship is poor company performance. “ [A startup] can be growing, but not fast enough for venture returns, and this is really frustrating for founders,” explained one seed investor. “They can start feeling upset and defensive, they start worrying about the company even more, leading to a spiralling situation.”

On the point of growth, one startup lawyer that we spoke to advises founders to

“look really carefully at what constitutes a “bad leaver” in your term sheet”

to avoid getting burned if the company outgrows you. 

Another of common frustrations investors have with founders is the management of forecasts and plans. Of course plans change, however, if you move the target between board meetings and do not communicate that effectively it can be a quick way to lose trust and have a board meeting derailed.

Several investors told tales of individual bad apples - the London-based CEOs who moved to the US on the company’s dime, and didn’t get board approval, for example; the uncommunicative founders who buried their heads in the sand when things got tough, or the sales people who failed to forecast correctly. 

And according to some of the founders we spoke to, investors aren’t blameless either. “The VCs [we’ve worked with] are complete bullshiters just kicking the tires, especially as they have multiple portfolio companies in our space. They want to understand the market and manipulate the competitive landscape,” claimed one founder. 

“Those who haven't been operators just try to copycat the big VCs. They don't understand [the] people, culture or strategy - just pre- and post- deal money.”

Chapter Summary

  • Like any relationship, managing expectations and strong communication are key
  • The due diligence you have performed on your co-founders and investors, as well as the agreements you have signed, really make a difference now
  • How you manage adversity as a founder or investor is the thing that the other side will remember - you build the best trust in the trenches.

CHAPTER 8

Moving onto bigger things: Raising the next round

Use what you’ve learnt from your experience as you come full circle and start thinking about that elusive next round of fundraising. 

One of the most commonly cited ways in which investors could help their founders is to assist with access to capital for their next round of funding.

And while your investor partners should be on hand to assist in finding and qualifying potential new investors, don’t leave the ball entirely in their court. “Do not only get in touch when you need money,” admonished one pre-seed/angel investor. “Be an advocate in helping encourage the next round.”

Again due diligence for new investors is super important, especially if you’re raising from international VCs. Here your existing investors should help open doors, and a brand name (angel or VC) on your cap table from the previous round can be very helpful in getting those pitch meetings lined up.

Remember, often the first thing new investors will do with their due diligence is reach out to your current investors. They need to have good things to say and be on board. 

Understanding the milestones for the next round as early as possible is vital here, and get clear alignment on what you can expect from your current investors as follow-ons. One founder we spoke to had their round flipped upside down when their lead VC in the previous fundraising round did not take their pro-ratas. Not only was this a £2million hole in their current round, but it also sent a signal of worry to the new investors.

Results like this can be hard for founders to understand -

“just because we fought hard for our pro-ratas doesn’t mean we will execute them”,

one told us. But the process is tough - investors then have to go back to the investment committee to do follow-ons, and there might not even be enough reserves in the bank to invest.

Inevitably, all of your communications, reporting, mistakes and victories lead to building your valuation and raising that vital next round of cash. “Milestones are always about the next round,” said one pre-seed/seed investor. “ 

For example, he said, a Seed at £30,000-50,000 MRR is a key metric in terms of introductions to the next round. “This is when I can then go to town in helping you raise.”

Chapter Summary

  • Only speaking to investors when you need money, is a recipe for disaster. Again, create that cadence of clear communication.
  • Any new investor will naturally want to speak to your current investors about how the business is going and what’s it like working with you.
  • You can use your current investors to help perform due diligence on new investors.
  • Set the target for your next round while you’re raising this round.

CHAPTER 9

Help me, help you: Achieving that harmonious partnership

We spoke to some extremely tuned-in, knowledgeable individuals to compile this report. So, to put their experience to the test, and hopefully make your life a little easier, we asked them all the question, ‘what could your founder/investor do to make your life easier?’ 

Founders to Investors:

“Continue being advisors. Follow on, make us look good, and [give us] a shoulder to cry on.” (Pre-seed startup, raised £250,000)

“Engage with the broader team - they can get more understanding and empathy if they connect with more of the team.” (Series A startup)

“Investors are modular; we’d hope [to] have someone who can help us look from start to finish, rather than pre-seed, seed, series A, B, growth.” (Seed stage startup, raised £2.5m)

“Some push for profit, some push for growth. The good investors will actually ask about how you approach measuring the numbers. Connections, partnerships, opening doors and lending a sympathetic ear [are all appreciated].” (Seed stage startup, raised £750,000)

“I almost wish they weren't as nice; I was raised to believe VCs are a necessary evil. But I [wish] they were more critical on progress and milestones.” (Seed stage startup, raised £1m)


Investors to Founders:

“If a founder is good at executing, it makes me up my game - it drives action. I love getting family and friends updates from founders [who we have passed on], or new potential investors - this is a great strategy.” (Seed investor, completing approx. 18 deals per year)

“The most important thing for founders is regular communication, [in a] structured way. It’s important that founders take investor relations communications seriously.” (Pre-seed/angel investor, completed 20 deals)

“Provide monthly updates, and be disciplined, reflective and have accountability.” (Pre-seed/angel investor completing approx)

“Keep people in the loop, be proactive in communication, and if a big customer churns - you need to let people know.” (Series B investor)

“In the hard times, good communication and relationships really suffer. Scale and be successful,  and everything else can be forgiven.” (Seed investor, completing approx. 6-8 deals per year)



CHAPTER 10

Acknowledgements

A big thank you to the investors and founders who kindly contributed their expertise to this guide. They are advancing the transparency and knowledge sharing within the ecosystem. Without them, this guide wouldn’t have been possible. 

Alex Dunsdon

Partner at SaatchInvest

Amit Rai

CEO at MachineMax

Andreas Cser

Partner at Automat VC

Andrew Baldwin

Finance Associate at Connect Ventures

Anu Shah

CEO ZAG Venture

Ben Naftzger

Co-Founder & GP at Enterprise Fund

Bridgett Connell

Investor at Angel Academe

Carmen Alfonso Rico

Partner at Samaipata VC

Cat McDonald

Investor at Albion VC

Charles Orr

Investor at Mosaic Ventures

Chris Darby

CTO & Co-Founder at EV.Energy

Christian Facey

CEO at AudioMob

Christian Hernandez Gallardo

Former Partner at White Star Capital

Christian Micco

Serial Entrepreneur and Startup Advisor 

Chrys Chrysanthou

Partner at Kindred Capital

Dag Lee

Entrepreneurial VC and PE Investor

Dan Kersh

Angel Investor & Advisor

Daria Danilina

Associate at Oxx Capital

David Fogel

Co-founder of Alma Angels

David Pritchard

Early & Mid Stage Angel Investor

Deepali Nangia

Investor at Atomico Angel Programme

Dominic Hill

CEO at Atelier Technology

Elliot Richmond

Angel Investor

Erik Abrahamsson

Founder at Digital Fineprint

Eze Vidra

Managing Partner at Remagine Ventures

Francesca Baillieu

Co-Founder at Associated.VC

Freddie Fforde

Venture Scout at Backed VC

Gabbi Cahane

Intermittent Investor and Occasional Founder 

Gauthier Van Malderen

CEO at Perlego

George Robson

Partner at Sequoia 

Harry Briggs

Managing Partner at Omers Venutres

Helena Prokhorenko

Senior Associate at Highland Capital

Hugo Tilmouth

CEO at ChargeUp

Hussein Kanji

Partner at Hoxton Ventures

Jack Wang

Investors at Keen Ventures

James Lynn

Co-Founder at Currensea

Jonathan Brody

CEO at Ladder.io

Julien Seligmann

Angel Investor & COO at SeedLegals

Julius Bleinroth

Investor at Zouk Capital

Katharina Neureiter

Manager at CDC Group

Kevin Dykes

Partner at Exit3X

Kieran Hill

Partner at Ascension Ventures

Kyran Schmidt

Seedcamp

Liam Patterson

CEO at Bidnamic

Maryam Mazreai

Founder at Autopsy

Matt Milligan

Co-Founder at Uhubs

Matt Penneycard

Partner at Ada

Mazdak Sanii

CEO at Avant Arte

Meganne Houghton-Berry

NED, Mentor and Angel Investor

Meri Beckwith

Investor at Omers `Ventures

Michele Cuccovillo

Serial Entrepreneur & MD at Rock Mission

Miguel Martinez

Co-Founder at SignalAI

Mike Taylor

Founder at Saxifrage

Nektarios Liolios

Co-Founder at The Future Farm

Nic Brisbane

Partner at Forward Partners

Nick Shekerdemian

Founding Partner at The Venture Collective

Olivia Higgs

Co-Foudner at NAVA

Patrick Murphy

Investor at Amaranthine

Paul Papadimitriou

Entrepreneur & Angel Investor

Phil Edmondson-Jones

Principle at OXX

Raees Chowdhury

Investor at Revolt Ventures

Ricardo Sequerra Amram

Investor at Point Nine Capital

Richard Robinson

CEO at RobinAI

Rik Lomas

CEO at SuperHi

Rob Hicks

Finance & Operations Lead at Kindred Capital

Rob Roscoe

CEO at Colenko

Saagar Bhavsar

Investor at Nauta Capital

Sarah Guemouri

Senior Associate at Atomico

Seb Wallace

Investor at Triple Point

Simon Merchant

CEO at Flagstone

Simon Thorpe

Managing Partner at Delta2020

Tilley Harris

Co-Founder at Akous

Tim Brownstone

CEO at Kymira

Tim Groot

CEO at Grip

Tom McGinn

Associate at Cooley's

Tom P. Kotecki

CEO at Oculo

Triin Linamagi

Investor at TVC

Upile Chasowa

CEO at Work Club

Vadim Toader

CEO at Proportunity

Vessela H. Ignatova

Manager at WeWork Labs

Walther Doernte

Angel investor

William McQuillan

Partner at Frontline Ventures

William McTighe

Investor at Vitruvian Partners

Ziv Reichert

Investor at LocalGlobe


And many more investors and founders who shared their experience and feedback but wanted to remain completely anonymous.