FOUNDERS: ARE YOU LOOKING FOR ADVICE OR MONEY?
At New York Angels we pride ourselves in helping early-stage founders reach scalability through: “Capital, Counsel, and Connections.”
As Angels we invest our own money, not funds raised from LPs, consequently many Angels aspire to have a different relationship with the founders that we invest in, which is reflected in our mission statement above. However, we recognize that early-stage companies approach our group, primarily for funding and some are wary about being “over-mentored and under-funded.”
This can, in some cases, lead to the investor feeling that a founder is: “Not coachable.”
So where does the sweet spot lie? How can founders leverage the expertise and networks of their investors, without feeling like they are ceding control or abdicating decision making? To answer this, we asked our members.
There was a good deal of sensitivity to the issue with Carl Pergola stating that:
“Let founders know early on that you will be there when they need you and will stay out of their way when they don't. If you can't add value, then don't waste their time.”
and Cindy Cook saying:
“Ask the founder where they need help...”
While Craig Frischling stated bluntly:
“Mentor only if asked.”
Many of our members cited the need to listen and understand the issues before any help should be offered.
Seth Masters wanted to get off on the correct footing:
“First, ask questions.”
While Criag Frischling provided a rationale for this:
“Ask questions to understand their priorities and pressing issues.”
And Jim Leslie articulated how this could lead into actions:
“Discuss topics that are of priority to the founder and ask questions to help him/her explore alternatives.”
Michele Evans noted that questions can even be solutions in themselves:
“The best way to mentor a founder is not always to give direct answers but to guide them through introspective and insightful questioning.”
Etienne Fretault noted the importance of questioning but also introduced a more fundamental concept:
“Mentors first need to spend time listening to the founders in order to understand their business challenges in detail, their objectives, and establish the required trust.”
In fact, the issue of trust was echoed by a number of Angels, including Simon Selitsky, who also wanted to be prepared:
“By building trust first, learning about the industry and the company ahead of time and being proactive.”
And Michael Costa who felt that trust could be established by:
“Meeting the founder outside a formal session.”
So, once the issues are understood and trust has been established, what happens next? How can the investors best support the company?
Michael Hutner likes to:
“Share experiences you have had in similar situations (both failures and successes).”
While James Leslie wants to:
“Help the entrepreneur explore the issues rather than telling them what you would do in their position.”
Tom Hirschfeld outlined an approach that was process driven:
“Experience helps with pattern recognition. How you're thinking may be more helpful than what you're thinking to the entrepreneur.”
While Dan Zitting’s approach was more empathetic:
“A "shared experience" is far more useful than advice. Sharing experiences involves exploring different perspectives and ways of thinking in similar or related scenarios…”
And he very honestly added:
“I find my very best shared experiences are those of my failures.”
In terms of how help and advice is given, there was universal agreement. As Seth Masters put it:
“Be respectful but honest.”
And Craig Frischling stated:
“Be challenging but not directive.”
In terms of when is a good time, the truth is that the entrepreneur may not know, so as Seth Masters believes,
“It is important to choose the right moment.”
And Simon Hopkins thinks that different help may be needed at different phases of the business:
“Provide ideas and encouragement in the good times, give emotional support when things get tough and ensure they know that you are always available.”
Finally, it should not be forgotten that most startups will fail, and that while entrepreneurs and investors have the shared goal of building a successful company, that goal may not always be realized. As Steve Kapner notes:
“The problem with advice is, that if it's not followed, then both the entrepreneur and investor feel bad with the outcome.”
However, when advice, support and introductions from an Angel Investor actively contribute to the ultimate success of a company (possibly along the lines detailed in this article), then all parties will feel great.
