Via Existing Investors

As you gear up for your next raise, the below set of best practices will help you bring about the best outcome in terms of your partnership with your existing investors.

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Build Trust with Existing Investors

Your relationship with your existing investors starts from the very first meeting (before they even decided to invest). As is the case with most relationships, your ability to build value will depend on the relationship history. The below best practices can be particularly helpful in building the right relationship history:

• Investor Updates: Most venture investors receive hundreds of monthly or quarterly updates. Yet, there are only a few that stand out. Charles Hudson from Precursor Ventures has written about how investor updates are becoming more common and less useful. The quality and calibre of your investor updates are a key signal of how things may be progressing.

• Quarterly Calls: Depending on the nature and preferences of your existing investors, you may want to do monthly, quarterly or annual catch up calls. These calls are most useful in building trust, in listening intently to investor perspectives, and building a shared view of the future.

Ultimately, the above are only a few ways to build trust with your existing investors. If there is mutual trust, and if your investors are full of admiration for your strategy and execution, then they will be a lot more likely to make strong introductions when it’s time for your next raise.

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Use Network Insights to Prioritise Asks

Before making specific asks, you want to conduct extensive research to identify the 3-5 most valuable introductions from a given investor. The total number of introductions that you can request depend on the nature of the investor and your relationship with them. It is, however, a finite number, and you want to ensure that you are ruthlessly prioritising your asks.

If you have a finite number of asks, you want to ensure that these are focused on the right set of target investors.

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Making Specific Asks and Communicating Well

When requesting introductions from existing investors, your goal is to make that as easy as possible for the person on the receiving end. To do that, you want to:

• Make Specific Asks: Ensure that your asks are specific in nature and don’t leave the recipient guessing as to what is required of them. Specifically, if your goal is to get introductions to new investors for your next round, then do the research to identify the “most likely” prospects. Also do the research to identify who your existing investors may or may not know. And then make specific asks.

• Communicate Well: In venture rounds, strong communications play a crucial role in building momentum and driving the forward motion. When requesting introductions, communicate the broader context around why you are looking for an introduction to the specific investor, and what makes your business a compelling prospect for them to consider an investment.