An early stage investor’s guide to founders

The relationship between an early stage investor and a founder is precious and can be fragile.

Recently, I have been writing about how founders can understand investor motivations.

Now I’d like to flip it.

Founders are not employees — treat them as one at your peril

Founders are people who build something from nothing.

This is very hard. Anyone who has tried knows this. For a company to elbow its way into relevancy in this noisy world we live in is non trivial.

Basically, no one cares…

… except the founders, who are:

  • Obsessed with the idea behind the company. They think about it all the time.
  • More motivated by impact than money.
  • Time poor. They stand on a ‘burning platform’ that will not hold at the end of their current runway.
  • All in. Unlike investors.
  • Bad at some things. Founders do everything at the start and no one is good at everything.

Here are some beliefs which anchor my relationship with founders:

Belief 1: Be there for them — its about them not me

The worst thing an early stage investor can do is to stand separate from a founder.

When I find myself saying “You” not “We”, I know I am drifting away. When investors bang the table and ask why a company isn’t hitting its targets they are not behaving in a way that makes success more likely. They are fracturing trust.

Once invested, we are all accountable for the success of the company.

But never forget, the founder matters more than you. They are working on the company every moment of every day. Investors go and do other things.

We can’t force our ideas. We need to be true collaborators and, if founders don’t believe in our incredible ideas, nothing will happen.

Belief 2: Respect their time

Time is short. Not busy like an employee. Everyone is ‘busy’ these days. The difference for founders is that, until a company has found a sustainable business model, they are resourced for short bursts of time.

When the money runs out, it’s all over unless they have made sufficient progress to attract more.

Don’t burden founders with excessive reporting and board packs. Don’t invite them to meetings that are for you such as every LP meeting you have.

It also means, help them to discover what works and what doesn’t work in the business. Months can be wasted on sub-optimal strategies.

Sometimes this means helping them to see weakness in something that they believe in. This needs to be done with Belief 1 as a primary driver.

Belief 3: Co-imagine the future

Even though I am not the founder, I obsess a lot about the companies I invest in. I do have ideas about ways to make the company stronger. Some would say, I need more distance. I think it makes my posture fundamentally aligned with the founder.

As long as I don’t betray the principles of Beliefs 1 & 2.

To the founders I work closely with, if I don’t behave this way — call me out. It is important to me.

This post was created with Typeshare




Deep tech VC — Main Sequence Ventures. Ecosystem builder. Maker. Director. Startup Scientist.

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Phil Morle

Phil Morle

Deep tech VC — Main Sequence Ventures. Ecosystem builder. Maker. Director. Startup Scientist.

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