HELAINE OLEN b SPREAD THE WEALTH
a veteran personal
fnance journalist, the
author of Pound Foolish:
Exposing the Dark Side
of the Personal Finance
Industry, and co-author
of The Index Card:
Why Personal Finance
Doesn’t Have to Be
f you’ve successfully landed investors
for your business, you know that keeping
them happy is a key part of your job. Yet
sometimes that’s easier said than done.
Everything from personality conficts
to deep-seated diferences of opinion
about how to fx problems can sour your
Good communications practices and
demonstrating respect for your backers’
opinions can help maintain the peace,
even when you disagree or your business
faces a setback. “It’s all about stakeholder
management,” says Alexander Lowry, a
professor of fnance at Gordon College in Wenham, Massachu-
setts, and an advisory board member for 202works, a platform
for fnding public policy experts that’s based in Washington,
D.C. So how exactly can you keep your money people happy?
CHOOSE YOUR INVESTORS WISELY If you can, be picky—and look
STAY IN TOUCH Regular updates to your investors are a must.
for backers who are aligned with your long-term vision. “We
were selective,” says Ryan Mughal, the co-founder and CEO of
Optio Surgical, a Lakewood, Colorado–based maker of software
designed to track medical devices and reduce hospital surgical
costs. Mughal says he and his partners turned down invest-
ments by people who wouldn’t commit to the founders’ desired
valuation or exit strategy: “It’s important to be on the same page
as your investors about where you’re taking the company.”
Mughal also recommends looking for backers with difer-
ent skill sets. “We wanted a well-rounded mix,” he says. “We
have physicians, software executives, and some fnance folks
as well.” That sort of diversity of experience may help reduce
tensions and long-term stress at investor-funded startups,
according to a study published in the journal Entrepreneurship
Theory and Practice in 2014.
Theo Lee, co-founder and CEO of KPop Foods, an L.A. startup
that makes Korean sauces and snacks, says he learned this
lesson after he got busy and didn’t send out his monthly investor email. Two weeks later, an angel investor reached out, worried that the radio silence meant trouble. “It was interesting to
me, because it wasn’t like he’d been immediately emailing,
texting, or calling after receiving previous updates,” Lee recalls.
“That’s when I knew how important updates are.”
How you communicate is also key. KJ Miller, the co-founder
and CEO of Mented Cosmetics, a New York City–based beauty
line for women of color, says she used to send out short monthly
updates, thinking people didn’t want to read lengthy communi-
qués. But she would often get back questions from investors,
asking for information she could have easily provided up front.
So she switched to bulleted emails, which would provide more
information but be easier to digest. Her investors “actually do
love data,” Miller laughs. “The more I can give them, the hap-
pier they are. But doing it in a bulleted manner keeps it from
seeming like they need to read a novel every time I email them.”
AVOID SURPRISES Don’t be an ostrich. Investors will fnd out
bad news; trying to hide it will only upset them. No one wants
to learn from an outside source that your business is about to
burn through its accumulated funds, says Vanessa Kruze, CEO
of Kruze Consulting, a San Francisco–based frm that works
with seed- and venture capital–funded startups. “It destroys
the investors’ trust in you and your team,” she states.
Miller says when she needs to communicate something
like a missed goal, she does two things. First, she makes sure
to put it in some context. Second, she quickly follows up with
more positive information. “This way, our investors know
we’re still moving toward our target,” she explains.
VALUE YOUR INVESTORS They’ve invested in your company
because they want it to do well—not because they’re secretly
hoping you fail. So make your investors feel needed for more
than their money, and if they ofer some specifc expertise,
take them up on it.
Lee says he always makes sure to add a line to his monthly
notes to investors describing where the company is currently
focusing its eforts and asking them to reach out with advice
and possible connections. As a result, he’s received feedback
and introductions that have improved KPop’s bottom line, at the
same time showing his investors that he values their counsel.
“Many investors feel good,” he says, “if they are able to contribute value and help an entrepreneur out.”
Make Nice With
the Money People
Congrats on fnding investors. Now, how
should you keep them happy?