In a previous essay about startups and the angel J-curve, I've shared how to structure your first round with operators and super angels to establish credibility in the ecosystem and build alongside the best founders and experienced operators who deliver a high check size to helpful ratio (CS:H ratio). More often than not, the smallest checks come from a value add investor who will be the most engaged and helpful in proactively seeking ways to build a reputation and add value in new and differentiated ways.
As we enter another year with an unprecedented amount of capital in the ecosystem, the startups that effectively activate their army of value add investors will create an engaged community of early believers and build a defensible moat around the business.
An unspoken truth in tech today is that the startup that raises the most amount of money at the highest valuation from the best firm is crowned the category leader.
A startup is an experiment until it has been blessed by the ecosystem. Activating your army of investors is a tangible strategy to:
- acquire more customers
- source and close candidates
- hit significant company milestones ahead of the next financing round
In this essay, we’ll explore three ways to activate your army of value add angels:
- Set expectations for investment
- Default to overshare
- Everyone on sales
Set expectations for investment with value add VC
The founder-investor relationship is a powerful virtuous loop
The more you engage your investors, the more involved they become and the more value they deliver in the shortest amount of time.
To build a strong bench, start by setting expectations for all investors.
Passion for the product is table stakes.
Investors need to understand how your product works before they can make relevant customer introductions, recruit executives from their network, and anticipate potential business risks and roadblocks in the future.
Some examples of effective expectations:
- We expect every value add investor to be a passionate users of the product
- We expect every value add investor to generate new leads & refer their friends/followers
- We expect at least 1 monthly call to get your feedback on company strategy
- We expect founder angels to champion our product inside your company
- We expect operators to introduce and help us close candidates
Determine your standard operating procedures.
Even the most helpful and experienced investors benefit from a standard set of operating procedures to ensure founders and the extended teams feel adequately supported and investors feel sufficiently helpful.
Some examples of standard operating procedures:
- We plan to send explicit asks to all of our investors on a weekly basis that require a single action: forward email, loop someone else in, a single sentence response
- We want to collaborate with all investors in real-time and have a WhatsApp, Signal, or Telegram group to chat live and share updates on a more frequent basis
- We send investor updates monthly and ask for a response within 24-48 hours
- We plan to ship substantial product updates quarterly and ask for your help upvoting on Product Hunt, Hacker News and sharing on your social channels
- We ask all investors to play a role in our company culture and ask for you to speak at our company all-hands once per quarter
For each ask, be explicit and reduce friction for investors.
Transform CEO Nick Handel arms investors with 3 key resources in every update:
- The ICP: “ideal customer profile” to activate your investor network and ensure introductions are relevant for the current phase of company growth.
- The customer sales deck: give investors everything they need to make an intro without drafting an email, downloading a deck, or doing anything beyond a forward or looping someone into the current email.
- Share link to relevant 1st degree connections on professional networking sites: Increase the effectiveness of your talent outreach by activating your value add investor’s first degree connections with a single LinkedIn link. Investors love reconnecting with old colleagues and sharing portfolio highlights with potential candidates.
When Almanac CEO Adam Nathan raised his seed round he left an ample amount of room for super angels with distribution and paired angels with a writer to document their core workflows and turn angels into super contributors on the platform.
This not only activated value add angels, but incentivized early believers to refer their executive friends and writers in their network to seamlessly contribute in a way that removed friction and provided a tangible value-add to every person on the cap table.
Default to overshare with your value add angel
Working in Public (openly publishing company values, strategy docs and recent learnings to educate and learn from the broader ecosystem) is one of the most exciting trends to come out of 2020.
Recent research by Asana, involving 13,000 global workers, revealed remote workers spent more than 157 hours in unnecessary meetings compared with last year.
The companies that built remote-first systems prior to COVID-19 have become the gold standard for default to overshare.
Remote work allows them to effectively onboard new hires, reduce the amount of time spent in meetings, and introduce new standard operating procedures internally and externally. This is a highly effective tactic for activating investors and up-leveling the entire ecosystem. When a company works in public, we all benefit from their learnings.
Levels CEO Sam Corcos openly published the company’s secret master plan on the company blog and continues to push the limits of working in public by sharing all company strategy docs with investors and early supporters.
Here’s my link to skip the Levels 85,000+ person waitlist 😎
While Linear CEO Karri Saarinen built his network and reputation as one of Silicon Valley’s most sought after designers in the flashy offices of Coinbase and Airbnb, he credits his team’s overall productivity and recent $13m Series A led by Sequoia to fewer distractions and their consistent open changelog for anyone to track the team’s progress and actively contribute to the overall evolution of the product.
Default to overshare is not limited to company strategy. Flatfile CEO David Boskovic says one of the most effective ways to activate value add investors involves consistently sharing moments of unprompted customer love.
“We keep investors engaged by consistently sharing customer updates. Not branded customer stories on our website, but snippets of sales calls using Gong and other forms of unfiltered, unprompted feedback from our customers.”
Investors are more likely to roll up their sleeves and open up their network when you provide consistent market validation and positive feedback from real customers.
Put everyone on sales to find your value add investor
While raising is notoriously tedious and stressful, it’s one of the few windows where your company has mindshare and a wide network of well-connected people who are incentivized to deliver as much value as possible in the shortest amount of time.
I encourage companies to activate potential investors long before a pitch or fundraise. Draft every email, ask, and necessary assets such as customer sales decks before kicking off a formal process. Fundraising moves fast, so preparation is key if you want to maximize the effectiveness of the process.
Some examples of everyone on sales:
- Create a shared pipeline in Notion or Google Sheets to track investor intros, add notes on a per company basis, and include key points for investor backchannel including highlights from previous conversations
- Draft emails for potential investors to send to the right point of contact at relevant portfolio companies
- Involve SDRs, AEs, and Customer Success leads in the process. Founders are busy and sales reps are measured by their ability to close new customers. When in doubt, engage your internal army of closers to accelerate value add investor introductions
Below are two examples of Hightouch.io engaging investors before an official product launch. The asks were split by company with tailored introductions to maximize the effectiveness of each intro request.
Always include what your company does and why your team is one to be taken seriously.
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As always, I’d love to hear from you and hope these examples provide tangible ways for your company to maximize your existing relationships with any value add investor and encourage you to engage with your community of early believers.
The ecosystem is filled with helpful value add angels, plenty of new funds, and firms stacked with super connectors who are able and ready to help.
It’s up to you to get creative and make every connection count.
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