How well you clarify the role that the company is expecting the investor to play, and the expectations that the investor has of his investment can directly impact the value that will be generated (or lost) during the period of investment.
The following link is an article from Fred Wilson, a successful investor in the tech space in New York.
In the article he talks about the fact that the role he plays is different from one company to the next, because every company is different, every company is created with a different purpose, every company is structured different, every company is at a different level of maturity – and so on.
One of the things we do at 5-2-50 is to help companies become “investment ready.” We also help investors and companies who are already in the investment relationship to work together better to bring the original vision of shared value on which the investment was made, to fruition.
Reading Fred’s post, and thinking through my own experience, caused me to formulate two questions for myself in my roles of sometimes representing the investor, and sometimes representing the management team of the company invested, or potentially invested in:
Do you know the role you should be playing in each of the companies you invest in? If not, you are probably just speculating.
Management team accepting an investment offer:
Have you clearly communicated and agreed the role you want the investor to play? If not, you may be passing up some very precious advice and coaching that can help accelerate your business plans, or you may be setting yourself up for a frustrating path of misalignment between investor expectations and business deliverables.
If you are in either of these two roles, and if you have not deliberately created this clarity, it’s very likely that taking the time for the management team and the investors to sit around a table to ask and answer some very specific questions around this, would be time well spent. Very well spent.
To your success