Saas News Hubb
Advertisement Banner
  • Home
  • SaaS
  • SaaS News
  • Contact
No Result
View All Result
  • Home
  • SaaS
  • SaaS News
  • Contact
No Result
View All Result
Gourmet News Hubb
No Result
View All Result
Home SaaS News

You Need to Know Where You Stand With Your Investors. Your Investor NPS.

admin by admin
April 24, 2023
in SaaS News


One thing that constantly surprises me is that maybe 80% of venture-backed founders I know don’t know where they stand with their investors.

Screen Shot 2017-03-07 at 9.58.22 AMThe bottom line is every professional VC firm and investing entity divides its investments up into 3.5 categories:

  • Super Green Light.  You want to buy every possible share, period, almost no matter what the price. See, e.g. Sequoia in WhatsApp. When you want to increase their ownership, and/or do “Super Pro-Rata” (invest more than your % ownership share) in the next round.
  • Green Light.  You are happy.  You want to own more, at least if you can afford to.  You definitely don’t want to own less.
  • Yellow Light.  You are worried.  Company is doing OK, but not crushing it.  It’s not clear it’s a winner.  You want to be careful about investing further.
  • Red Light.  You are out.  You believe your investment is a loss.  Send the associate to the board meetings.  Do not invest anymore, period, except in certain game-theory situations (total wash-out, pay-to-play, etc.).

 

If you are cash-flow positive, or have 24+ months of runway, if you want — you can ignore all this if you want.

But if you are going to need more money at any time in the remotely near future, first, you need to know:

  • Will my existing investors invest more — period?  How much?
  • Will they invest more than their “pro rata” (Super Pro Rata), their pro rata — or less?
  • Will my existing investors bridge me if I need more money, and there isn’t a new lead?
  • Will my existing investors make intros for the next round?  Who are these intros?

Folks.  If you don’t know.  Just ask.  It is OK.  It really is.

Go around the room each board meeting.  At the end of the meeting.  Put everyone on the spot.  Have a slightly awkward discussion.  It’s OK.  It’s much better to know.

Ask how you are doing overall, 1-10.  And ask about their appetite to invest more.

Putting your investors on the spot like this may sound unusual.  But I think if you do, you’ll get an honest answer.  Maybe even a more honest answer than if you ask 1-on-1.

And don’t ask 3-6 months before you are out of money.  Ask every board meeting if you want.  Definitely, start asking when you have 12 months of runway left.  Don’t wait.

You need to know.  You are CEO.   Your job is to keep the engine fed.

Most CEOs are too optimistic.  They think their investor NPS is higher than it is.

When I make an investment where I want to own more, you’ll know it.  I’ll be asking.

(note: an updated SaaStr Classic post)

Published on April 24, 2023





Source link

Previous Post

How to Generate Leads on LinkedIn in 2023, According to LinkedIn’s VP of Marketing

Next Post

How To Stay Calm Under Pressure at Work (According to Professionals)

Next Post

How To Stay Calm Under Pressure at Work (According to Professionals)

Recommended

The Top B2B SaaS Startups in Austin

3 weeks ago

How to Develop a Content Strategy in 7 Steps: A Start-to-Finish Guide

6 months ago

What Is a Salesforce Developer?

2 months ago

SEO best practices organic search engine optimization

6 months ago

Gartner: Overall IT Spend Has Slowed. But Software? That’s Still Growing.

4 months ago

3 Ways to Improve Your Healthcare Contact Center

6 months ago

© Saas News Hubb All rights reserved.

Use of these names, logos, and brands does not imply endorsement unless specified. By using this site, you agree to the Privacy Policy and Terms & Conditions.

Navigate Site

  • Home
  • SaaS
  • SaaS News
  • Contact

Newsletter Sign Up.

No Result
View All Result
  • Home
  • SaaS
  • SaaS News
  • Contact

© 2022 Saas News Hubb All rights reserved.