Angel Investors

7 Ways to Build Rock-Solid Relationships With Your Investors

7 Ways to Build Rock-Solid Relationships With Your Investors

Robert Herjavec, Lori Greiner and Daymond John take part in a panel discussion.

Image credit: REUTERS | Gus Ruelas

When financing is the only thing holding your startup back from stardom, your heart might be set on hooking an investor and running off to make your dreams a reality.

With investors, however, a deal is never truly done. Just because you wooed an investor doesn’t mean you won’t need him or her again in the future. In fact, these individuals may offer incredible business acumen and resources that can get your business on the right track. If all goes well, you'll be connected with other projects or partnerships in the future. And if all doesn’t go well, an investor who thinks highly of you may provide guidance for -- or even back -- your next venture.

Related: 3 Things You Must Know Before Pitching Investors

While you and your investor may not be soul mates, that doesn’t mean you shouldn’t have a productive relationship. As an entrepreneur, it’s your responsibility to strengthen ties with investors to position your current and future ventures for success.

Here are seven strategies to help you build and maintain strong relationships with investors:

1. Recognize their value beyond finances.

Never select an investor based solely on funding. Investors are invaluable mentors who can accelerate your business. Acknowledge the relationships and expertise investors bring to the table by giving them a voice. An example: A short while back, an investor emailed me about an issue his friend was having with our app. We did some research and found that it did indeed affect some of our customers. Only with my investor’s personal involvement were we able to identify and resolve the problem early.

2. Listen to their underlying concerns.

Investors want your business to succeed just as much as you do. Encourage open, clear dialogue so you can learn more about the risks your investors are willing to take, the ones they'll balk at and the reasoning behind these decisions. Only then will you truly understand your investors' concerns.

3. Share your passions and convictions.

Investors aren’t just investing in your idea; they’re investing in you. Nothing scares them more than an entrepreneur who’s going through the motions and constantly seeking direction and reassurance. Communicate your passion for your company and what it stands for from the start. They’ll respect you more for it.

Related: Want Angel Investors? Here's What You Need to Know Right Now.

4. Set clear expectations at the beginning.

You and your investors need to be on the same page about vision, scale of growth and potential exit plans. Setting these expectations can save both sides disappointment and frustration later on.

5. Communicate wins and challenges frequently.

While most investors don’t want to be involved in your company’s day-to-day business operations, they appreciate updates on your progress and take pride in your company’s success. Beyond formal key performance indicators, they’ll be thrilled to hear about new partnerships, exciting deals or noteworthy new customers. Provide both good and bad information promptly so your investors have time to plan, scale quickly and come up with alternate strategies.

6. Consider hiring a professional mediator.

Whether you and your investor come from different states or different parts of the world, cultural differences can create huge barriers to communication. If this is the case, consider hiring a professional who can hear both sides objectively and facilitate clear communication.

7. Be authentic and respectful.

A solid relationship is rooted in authenticity and respect. Don’t be afraid to break out of the business rhetoric and interact with your investor on a personal level. When I spent Russian Christmas and New Year’s one year with our overseas investors, we got to know one another more intimately; these partnerships then naturally evolved into more productive business relationships.

Investing in your venture isn’t a “fund it and forget it” scenario for any investor. In fact, investors will grow wary when there’s too much silence. Share plenty of small wins, and keep communication strong. If you set the tone for a mutually beneficial relationship, your investors will feel confident in your abilities and be more willing to invest in you in the future.

In sum, as with every relationship, you’re bound to reach a crossroads with your investor at some point. Growing, going public and failing are huge tests for entrepreneur-investor relationships. If you don’t prepare to work through these challenges now, they could lead to a messy breakup and ill will later. 

Related: The 9 Things You Should Never Do When Pitching Investors