Investors: how you help, how you think you help, and how you make a giant mess

How you think you help


Liron Azrielant

2 years ago | 3 min read

Every investor you meet is likely to refer to herself as a value add investor. Some funds have even built their brand around their ability to support founders with much more than funds.

In an attempt to understand the (potential) gap between what founders want and what investors offer, I’ve conducted two short surveys — one for investors and one for founders.

For this post, I wanted to avoid answers that are too ambitious or unrealistic, and to show how investors are helping right now, not how they might help in the future. I therefore only asked what investors actually did for the company, not what they thought they should do.

How you help:

46 founders answered the survey, listing 67 actions. All answers were free text, which I later classified to categories. When an answer listed more than one action, I split the score between the two or three actions listed, giving one half or one third of a point to each action.

To clarify the categories, intros refer to simply connecting the founder to the stakeholder, if that intro included working with the founder to close the deal, I’ve considered it to be tactical help in addition.

Strategic help is mostly contributing from the investor’s experience and emotional support is simply believing in the founder and showing that support. Financial support relates to giving the company a bridge, syndicating or structuring a round — not the initial investment, which is a given.

Clearly, introductions lead the value-adding table, with introduction to clients ranking the highest for bringing value to founders.

It’s also interesting to see that many founders mentioned believing in them (classified as emotional support) as the biggest value add received from their investors.

When grouping all the intros into one category, and treating “backing off” and “emotional support” as two sub categories of letting founders lead, the following chart is generated:

While some founders valued investors for rolling up their sleeves and supporting them with the day-to-day, or giving out strategic advice, most seemed to prefer investors who made an intro when needed and then let the founders lead. Founders appreciate investors that let them run the company a lot more than those who got into the weeds with them.

How you think you help

In parallel, I’ve sent a one-question survey to 40 investors.

When I decided to conduct the survey, my initial hypothesis was that strategic advice, tactical help and active company management are going to be ranked much higher by investors’ perception.

With the notable exception of “management change” — mentioned by investor as helpful but never by founders, most actions investor believed to benefit the company followed those founders found to be most helpful.

Similarly, when grouping the answers into categories, the following chart is created:

Introductions seem to be even more important according to investors, and its good to see the clear alignment in expectations on this category. As expected, letting the founders lead was considered much less important by the investors.

How you make a giant mess

The real insights, however, came from the next question in the founders’ survey.

Since the stories here were a lot more interesting, here is some more color to what each category referred to:

Extortion: any form of using veto rights, funds or other levers to maximize the investor’s own piece of the pie, sometimes at the expense of the whole pie.

Breaking contracts or agreements: not investing when committing to, reneging on a term sheet or negotiating in bad faith.

Over involvement: micromanaging, intervening with decisions that should normally be left for the CEO or bypassing the CEO.

Misconduct: any form of extreme lack of professionalism (example: showing up drunk to a meeting).

Conflict of interests: promoting matters other than the company’s as a board member or a shareholder (example: pushing for a partnership with another company investor has shares in, solely for the benefit of the other company).

Bad management: steering or pushing the company into making decisions that were wrong for it, or interfering with company’s operations in a manner that was disruptive.

Under involvement: displaying disinterest in the company, or refusing or forgetting to help when asked.

Do no harm

All founders who answered the survey had raised money from at least one investor, many of which considered top tier.

While investors put time and effort to build platforms — including HR, Marketing, PR and business development teams — to compete over founders, it was surprising to see how many still failed at the basics. Almost every founder questioned had actual horror stories about at least one of their investors.

The most evident conclusion coming to mind is that the best thing an investor can do for her companies is first - do no harm.


Created by

Liron Azrielant

Liron is a General Partner at Meron Capital, an early stage fund investing in technology companies in Israel.







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