[Founder’s Real Talk #22] Building trust with your investors

Last weekend I was hanging out with another founder friend. He’s a first time founder of a seed-stage startup. The startup taps into a massive market with a lot of old-school large enterprises as clients, partners, and strategic investors.

The recent economic downturn is hurting the risk appetite of some of his strategic investors, which is impacting a new round he’s trying to raise. Luckily, because of the trust he has built with most of his investors, he was able to limit the impact to only a few investors, which was huge for the stability and survival of his startup.

How did he build that trust? He has been writing weekly updates to all his investors via Surfboard, so everyone is in the loop of his thoughts, strategies, and ups-and-downs, so there’s no surprise to anyone.

This trust is so precious during difficult times like this. With this trust, he’s way beyond his peers that only report cold numbers and good news, but more like trustworthy person, an entrepreneur tinkering and experimenting to make things work.

I personally think this is huge for entrepreneurs of our generation. Yes you are building a business, so the cold numbers and major updates are of course important — that’s how your investors make their money. However, with so many competitors that are offering very similar products and services, how do you stand out and how do you make your investor trust you, especially during difficult times?

It’s from a continuous time-series of data points (weekly updates) that showcase your honest and deep thoughts so your investors really get to understand who you are as a person, and can put trust in you during difficult times. Certainly it’s out of the comfort zone of a lot of people, but it is a feature not a bug — it’s hard to win trust, and sometimes you have to show your vulnarabilities. (Think about any figure you see in movies, novels, or TV series — you won’t have empathy to any one until the point you see their vulnarabilities.)