Sonny Singh is a seasoned sales and business development executive with 15 years’ experience in helping to grow technology companies. He is currently Chief Commercial Officer at BitPay, the largest processor of bitcoin in the world.
Prior to BitPay, Sonny was VP of Sales at Jumio and is currently an advisor at Lumia Capital. If that wasn’t enough, Sonny is also a serial investor himself - having invested in TubeMogul at the seed stage up until their IPO in 2014, as well as Narrativ, Jumio, Getaround and many more.
"_Founders need to remember that angels will not be put off by war stories; entrepreneurship is a long hard road and angels know that better than anyone._"
Startups Must Communicate with their Investors!
As an angel investor, you can expect to have to wear many different hats in the pursuit of growth for your investments. However, the way in which a startup communicates with you will determine which hat you must put on at any given moment.
The importance of communication is something that cannot be stressed enough. As Sonny Singh stated in our interview ‘the one thing a founder really needs to do is keep their investor-base updated’.
3 Ways Communication with Investors Benefits Startups
Initial Traction With the technological advances we have seen over the past decade, startups can now create, test and launch a product in just a few months. Therefore, frequent communication with investors in this ‘building period’ pre-launch will not only create a user-base to deploy the new product to on launch, but it will increase the startup’s ability for further customer acquisition and increase the likelihood of press and media coverage.
Funding, Funding, Funding Looking at the likes of Zenefits, it is apparent that startups can not only create faster but scale faster. As a result, it is not unusual for a startup to require further funding in quick succession to previous funding rounds. If the founder has an engaged investor-base with whom they have kept in frequent contact, it is far more likely they will be able to secure this follow-on funding.
Product-Market Fit Most founders have an unwavering belief in their product. Although this can be extremely beneficial and even the core of the company’s existence, it can also be a hindrance at times. If investors are kept in the loop and consequently enjoy a good relationship with the founder, they will be able to exert their influence when a product is not robust enough to make significant traction in the market and a pivot is necessary.
Why Don’t Startups Communicate with their Investors?
Despite the clear benefits of keeping your investor-base informed, many startup founders do not do so regularly. Why is this?
Well, a prominent investor friend of mine, stated that ‘if your startup isn’t sending you monthly updates it’s going out of business’. When pressed further on the matter, he described the scenario of a young child given a gold star at school. What do they instantly do when they come home? Proudly show their parents their achievements of the day. A startup is no different, if it is making good progress, trust me, they will keep you updated.
Angel investors don’t just provide capital to startups but are also a potential source of advice and guidance. So, if, when times are tough, founders do not communicate with their investors this is cause for concern. When founders are struggling the first people they should be leaning on are their initial angels. Founders need to remember that angels will not be put off by war stories; entrepreneurship is a long hard road and angels know that better than anyone.
What can Angels Do To Ensure Founders Do Communicate?
As an investor, you should keep a record of all the contact your investments have had with you. The simplest method is to set up a spreadsheet with all your investments down the side and the months of the year along the top. As the months go by you can tick off the startups that have communicated with you and leave blank those that have not.
From this simple chart you will quickly be able to see which startups are struggling and which are succeeding.
Then start making calls and asking what you can do to help those who have not been communicating with you. It's at this point that the value of an angel really starts to make an impact, so step up to the mark and prepare for battle.