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How to Work with a Private Equiteer

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October 17, 2013

The way to work with VCs and PE investors is not common wisdom, yet. So this week we decided to highlight an article by US-based entrepreneur, Nick  Mehta, the CEO of startup company Gainsight, writing for VCJ, describing things that CEOs should know about VCs.

 

Mehta suggests that entrepreneurs keep the following points in mind, which your DealMarket Digest editor selectively summarized.

1. Keep Investors Excited. Send updates about customer wins and product updates as they happen. Invest time in energizing your investors.

 

2. No Surprises. Notify the board of bad news before board meetings. “When you get tough news, digest it and give your board members a call – talk them through it and share your game plan.”

 

3. Take Feedback. You want your board to give honest feedback? Then take it. Be mature – the investor might not always be right, but listen and incorporate what makes sense.

 

4. Give It Back. Tell your investors what you want. Do you want input after each board meeting? Tell the board members if you need them to play a specific role, such as help with people issues. “Help them get better, just like you help your team.”

 

5. Focus Them. Ask for input only when help is needed. “Begin every board interaction with a list of the key areas where you need assistance and guidance. Keep the content focused on those areas.”

 

7. Understand The PE or VC Business Model. Do you know what it means when a VC talks about managing a portfolio, optimizing for returns, and homeruns? For example, if their model depends on single and doubles, don’t expect them help you become a homerun startup with a billion dollar valuation. If you disagree on the play, call the issue out rather than letting it fester.

 

10. They Envy You. Many VCs would like to be entrepreneurs. You are lucky to be. Appreciate it. (Image source: Gainsight website)

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