How To Be A Value-Add Investor

by Kera DeMars
"How can you be a valuable asset to the founders you invest in?" 

We got this question shortly after launching Small Bets from a reader named Gus Álvarez (hi, Gus!).

It's such a great question.

Let's dive into three different ways you can be a value-add investor, starting with the lowest barrier to entry.

 

1. Don't Be Annoying 

Time commitment: 0 hours

I grew up as the baby of three children, so being annoying is a specialty of mine.

But startup founders are not your siblings, and they will not find your annoyance charming.

Here are some ways you can reduce your annoyingness:


Stop calling 

It's common for investors – especially those new to the game – to get nervous about their investments, especially when they see articles about a competitor's recent raise. 

It may feel instinctual to call the founder and hound them with questions about how they (the founder) are going to keep up.

Don't do this. 

You'll just stress out your founder, and ultimately your concerns will not be addressed.

If anything, you could email the article to the founder, and include some words of encouragement, like "Just wanted to pass this along - I'm not worried, and you shouldn't be either!".


Be "time appropriate" with your due diligence

Doing your due diligence about a company is both appropriate and expected. But consider how much time and effort you're asking a founder to give you.

For example, do you really need 5 meetings with a founder before you put in your $5k - $10k check?

Probably not. Probably 1 or 2 meetings would suffice. Double that number for a $25k check.

Do you really need 5-year projections for a seed-stage company?

Nope. Asking about her customer acquisition strategies, customer discovery process, and team will give you the insights you need.

 

2. Be A Teensy Bit Helpful 

Time commitment: 30 seconds - 10 minutes

Maybe you have a little extra bandwidth this week. Here are a few low-lift ways you can actively improve your founders' lives.


Acknowledge their feelings (~30 seconds)

Founders often send detailed updates to their investors. And in return they get... crickets. Silence. Nada.

One easy thing you can do: respond!

Responding with "Thank you for this!" or "Great job, team!" or even "Hang in there - I know it's tough, but you'll get through this"  can make a huge impact.


Offer your eyeballs (~10 minutes)

This is something anyone can do.

Offer to review your founder's landing page, pitch deck, or sales materials.

Even if you're not an expert in those things, you can offer an outsider's perspective.

Giving feedback on the clarity of the content or usability of the page can be wildly helpful.

 

3. Go above and beyond

 Time commitment: 30 minutes - 2 hours

Overachievers, this section's for you.


Make introductions (~30 minutes)

Intros are one of the biggest lifts you can give your portfolio company.

Help them connect with angel investors, VCs, potential customers, partners, or recruits.


Share your expertise (~1 hour)

Give your portfolio companies a leg up by helping them in your area of expertise.

If you're a content marketer, help them with their keyword strategy.

If you're a sales guru, help them refine their pitch.

If you're a seasoned manager, help them with their hiring process.


Set up a portfolio meet-n-greet (~2 hours)

If you're going for gold when it comes to helping your founders, you could go nuts and plan a meetup for them.

Founders love to connect with other founders. Those relationships can lead to collaborations, partnerships, or much needed moral support.

So, invite all your portfolio founders for happy hour. You don't need to foot the bill... just giving them an opportunity to connect with one another will help you stand out from other investors.

Or, take it a step further and invite your investor friends to the same meetup.

When investors and founders come together in a low-pressure environment, literal magic can happen.

Your cart
    Checkout