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AA 007: In what ways can Angel and Seed Investors have an impact in their portfolio companies and add value other than writing cheques?

Welcome to the sixth podcast of the Ask Alex show! Today the question is “In what ways can Angel and Seed Investors have an impact on their portfolio companies and add value other than writing cheques?”

In this podcast, we run through the key ways investors add value and can actually help you out, or keep you accountable, We also address the importance of getting someone onboard that isn’t super annoying! Perhaps they’re the smart money… for you! Listen to learn more!

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Transcript if you prefer to read

Hi, guys! Welcome to episode 7 of the AskAlex podcast. Today, we have a question from Jason in New York. Jason, thanks for the question. Jason asks “In what ways can Angel and Seed Investors have an impact in their portfolio companies and move the needle other than writing checks?” Right, well, hey Jason every investor will say and needs to these days that they are active for value add investors. Basically no one will say that they aren’t and in fact if someone actually says “You know what Jason, I just write checks. I expect you to execute.” Don’t think that they’re necessarily dumb money maybe they’re the smartest money you have.

So how can investors actually help you? Firstly, introductions, no brainers. Intros are fab they’re easy and they’re a total win-win so long as you deliver on your end too and don’t burn their network. So lots of different types of introductions that investors will be able to give to you. That could be to other investors, to how to do your sales, to find industry experts to talk to.

Always be asking investors for access to the network; knowing who the network is who they may be able to help you with. One investor who is quite well known called Ron Conway for having a massive Rolodex. He will sit down with the founder straight after they invest and ask them what they’re looking for and run through their entire Rolodex to find a big list where they can immediately add value to that company. That’s pretty cool. Secondly, recruiting; people know people depending on the industry that they’re in.

If you’re in Fintech and your Angel Investor happens to work in a bank say JP Morgan, he may know your next senior hire which could potentially be a JP Morgan or a Citigroup or Goldman. People know people in their industry. They hang out at bars, they go to restaurants with each other, they meet up and musings. If that angel investor is in a tech company working in product then maybe he knows product people, people who’s worked with him in the past that may be looking for a job. Recruitment is all about knowing who might leave and when they are open to an idea. So people being taps into a specific industry will have a much better insight than you may possibly have. Thirdly, close deals; if you’ve got a great hire, perspectives hire that you’re trying to get over the line they can put in calls and help try and get that deal done. That hire over the line. They can also help negotiate big deals.

This for example for Fintech company in Thailand, for example, who is trying to get a senior executive on board. So you call them up and say you’re one of the investors and you know, you really need to get into this company it’s going to be a huge thing. You know, really sell that deal on behalf of the founders. Next, they can help make you accountable. Founders who really do stupid things, it’s annoying. Honestly, they steal money, they buy stupid crap, they just don’t know how necessary to spend the money. Maybe they shouldn’t be doing marketing early enough. So make your financials available and actually be accountable.

And I know this isn’t applying to everyone but now and then it’s pretty useful to make sure that you are keeping yourself honest or with some common sense. Now, fundraising; if you do a good job and you communicate well they can give you more cash. If you treat them well they may even be able to make intros to other investors to fill out a syndicate. Maybe they are bankers they could even help you with your financial model. If you don’t have the model already, I recommend heading over to alexanderjarvis.com/fundraising-models and if you are working in SaaS or e-commerce then we’ve got some pretty good goodies that you can feel free to check out there. Next, perspective; they don’t know what you do as well as you do. You’re meant to be the real industry expert and really know your business so they can ask dumb questions that you may not have a good answer for. They can help with strategy and even your focus. Now finally, cheerleading; if they love you they’re going to tell everyone about you every single day. All the times that they’re having interesting conversations and the topic of startup comes up. You can be darn sure they’re going to toot your horn. So, these are a number of areas where they will be able to add value to you. Of course there are other ones but these are the most common ones which people can offer value. So you need to tell your investors what you want. They don’t know, right? You don’t get if you don’t ask. In board deck template that you can get for free at alexanderjarvis.com/free-tools. I make this explicit.

And I even have a follow up page to make sure everyone has been held accountable and not just yourself. Ultimately, it’s you who’s going to build your startup. Investors are just there to add some extra juice. Don’t go trying to fool around assuming everyone has done money. The reality is most people don’t have the luxury to always get the smartest money in the room. So try and get people who won’t be annoying, someone who’s not super clingy and really wants to get involved in your business. I’ve got an awesome friend of mine who did her Seed Round or I guess Angel Round filled it out with quite a number of Angel Investors and unfortunately managed to get to chat who was super, super annoying calling 2-3 times a week looking a massive amount of information and that’s just a massive distraction and so she’s trying to get him out of her deal. So really be careful about who you’re getting into bed with and frankly maybe that investor who says “I’m just going to cut you a check and leave you alone.” is actually the best value add investor you can get. So thank you so much for that question Jason. I hope that’s useful to you and sheds some interesting thoughts. If you would like to get featured on AskAlex head over to alexanderjarvis.com/askalex and hear to the bottom press that big shiny red button and ask me your question too. Thanks, guys. Have a fab weekend, bye.

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