Investors can be a great resource for founders — and not just because of the capital they provide. Many investors have great operating experience and vast networks, or they've at least observed many startups from the sidelines and can offer good advice based on the patterns they've seen. Unfortunately, a lot of founders underutilize their investor network.
Here are the three most common mistakes that I see:
- Never asking for help and declining offers of help. I'm not sure if this happens because founders feel guilty about asking for help, or if they're afraid of being judged negatively if they aren't handling everything by themselves, or if they think investors won't be of much help. The reality is that most investors like being helpful, and they have a lot to offer. They invested in your company because they'd like to work with you and because they hope to get a good ROI, and being helpful addresses both desires. Furthermore, any advice you get is not binding, so if you don't like it, you don't have to use it. It's still your company to run.
- Asking for the same things as every other company. Every month, I see 10+ investor update emails that include some variant of "We need help finding awesome engineers." I know. I really want to help — and sometimes I can — but it's hard when every single company is also looking for awesome engineers. I might meet 1-2 strong candidates each month, but if there are 30 companies vying for those candidates, the math just doesn't work out. A more reliable way to get help is to ask for things that are not zero-sum. For example: the opportunity to talk with a cryptography expert for an hour, an introduction to someone on Google's Chrome team, feedback on your website redesign, and so on.
- Only asking for help in one or two areas. It's actually perfectly fine to ask for help with hiring if that's not the only thing you ask for. The problem is that many founders ask for that and nothing else. By offering more options, you maximize the chances of each investor being able to help you somehow.
Fundamentally, most investors can be viewed as 1-2 hours of free labor every month. There are exceptions, like board members/major investors who'll be willing to put in a lot more time, or very casual investors who might not want to invest any time at all, but most investors are good for at least some (free) work every month.
So what can you ask investors for? Almost anything! Some ideas:
- Potential hires.
- Specific customers or partners. ("Looking for an intro to a Director of or higher at Foursquare.")
- Customers in a specific vertical. ("Looking for intros to mobile gaming companies with at least $2m in annual revenues.")
- Experts that could help your company. ("Looking for info on handling security questions from Fortune 500 companies.")
- Leasing office space. ("What is a typical price per employee for SoMa/downtown Palo Alto/etc?")
- Equity and salary grants. ("What is a typical comp package for a VP of Sales who is employee #8?")
- Commission structures and goals for salespeople. ("What's a good monthly sales quota for a product with our target customers and price point?")
- Company metrics. ("What is a good goal for my churn rate?" or "What is a typical CTR for marketing emails?")
- Website UI, UX, copy, etc.
- Mobile app UI/UX.
- Sales decks, pitch decks, marketing materials, etc.
- Resumes of people you're thinking of hiring.
- How to make the most of various growth channels. ("What are some best practices for using Facebook Ads?")
- How to approach your next round of financing.
- Which vendors to use for PR, SEO, Health/Dental benefits, etc.
- General company strategy: product roadmaps, expansion plans, customer segments to target, etc.
So next time you write an investor update email (and you should be writing those monthly!), list out 5-10 things that you'd like help with. It takes very little effort, and you might be surprised by the results.