How to Nurture a Venture Capital Relationship

Written by Lindsay Mayhall on May 10, 2022

As an entrepreneur, you always have to be on the lookout for new opportunities. It could be a new business idea or talking to investors, which entails meeting and/or networking with venture capitalists or angel investors. VCs are everywhere: at conferences, networking events, trade shows, even church!  For other entrepreneurs that are trying to raise capital and want to learn how to nurture a venture capital relationship, the following is a bit of advice from past experience.

Define and communicate clear metrics.

 Being able to define and communicate clear metrics is the first step for nurturing an investor relationship. You need to know how much money you need and when you're going to need it.

You also need to be able to measure whether or not your company is meeting its goals, so that investors know if they should keep investing in you.

If your goals are not being met, this is a sign that something needs to change. If they are being met, then the next steps are clear: raise more money or sell more products.

The best way to do this is by setting up a dashboard that tracks all of your key metrics throughout each month; investors love seeing this data before they invest in you because it gives them confidence that their investment will pay off in the long run.

 Choose a time to talk regularly.

 Developing a relationship with a venture capital firm is similar to any professional relationship. You need to put in the work to build trust and credibility, make yourself available when they need you, and demonstrate that you are responsive and proactive.

Choose a time to talk regularly. Whether it’s weekly or monthly, set up regular calls or meetings with your venture partner at least every four months. These conversations will help you keep each other updated on what’s going on at your company and how it relates to their portfolio companies. They’re also a great opportunity for you to share highlights from your last few months, including any new hires or partnerships that could be relevant for them.

Make yourself available when they need you. If there is an event like Demo Day or another milestone coming up that would benefit from having the VC present (or if they really want to be there), make sure that they have all the information they need in advance so they can plan accordingly.

Give open and honest updates on what's working and what's not.

 It's easy to get caught up in the excitement of a new relationship. It's also tempting to spend all your time talking about your business, so you can't help but wonder: "How do I nurture this relationship?"

The answer is simple: You nurture a venture capital relationship by giving open and honest updates on what's working and what's not.

When you're in the process of raising money, it's easy to lose sight of how much work actually goes into building a company. Your board members are busy people who have many other things on their plates. You need to make sure they know how things are going with your business so they don't have to ask every week. That way, if there are any problems or concerns, they'll catch it sooner rather than later.

Keep your conversations very open-ended and non-specific until you meet again in person. If something important comes up during an email conversation that needs more discussion, schedule a phone call or meet them for coffee later in the week or month when you can talk more at length about it.

 Be proactive in seeking your investor's advice, but don't take it personally if they say no.

 The best investors will not only give you feedback and advice, but they will also help you anticipate challenges that may come up in the future.

To build a relationship with your VC, be proactive in seeking their advice. Don't wait for them to ask you what you think about something; if there's something that's bothering you, bring it up first. If there's a problem with your team or a deal that's not working out, let them know right away so they can help address it.

Be honest about what's going on in your company. Don't just ask for advice when things are going well — share negative news as well. Good investors understand that startups have ups and downs, making it important for them to hear about both sides of the story from time to time.

If your investor offers up helpful advice or feedback, don't take it personally if they say no or don't agree with you 100 percent of the time. A good investor wants to do what's best for your business — even if that means disagreeing with you sometimes!

Don't wait too long to ask for more money if you need it.

 Venture capitalists are not banks. They're not in the business of lending money to startups. They invest in startups with the expectation that they'll make money when a company goes public or gets bought by another company.

That means VCs will be happy to see you again when it's time for your next round of funding, but they won't wait around until that time comes if they have other options. They're looking for companies that will return their investment many times over, and if your company isn't on track to do that, they'll move on to one that is.

Don't wait too long to ask for more money if you need it. If you've raised enough money from investors and don't need more capital now, great! But if you do need more funding and haven't asked yet, there's a good chance investors are expecting you to ask soon — whether or not they would actually invest more money right now. So don't wait until you need another round of funding before asking around; start making introductions and setting up meetings as early as possible so investors can get to know your team and product before they decide if they want in on the next round of financing.

Maintain a good relationship even after you've taken your company public or sold it.

 After you've closed your first round of funding, the work begins. You need to build a relationship with your investors to keep them engaged and excited about your company's future.

It can be easy to think that once you've closed your funding round, the job is done and you can relax. But venture capital is an ongoing relationship. Your investors are looking for opportunities to help your business grow — and they expect you to keep them in the loop.

Keep them updated on company news. Investors want to know what's going on at the company they invested in. They're more likely to get involved when they feel like they're part of the team and have access to information before it reaches the public domain. If there's an upcoming event or announcement related to your business, let them know about it first so they can plan accordingly.

If you nurture the relationship with your venture capital partner, your business will prosper.

Ultimately, remember that your venture capital investor is a partner. You need to nurture your relationship with them just as you would any other business relationship. Doing so will ensure that the investment they have placed in you was worth their time and money.