A consistent theme during several of the panel discussions at yesterday’s “36|86 Entrepreneurship Festival,” organized by Launch Tennessee, focused on the importance of building and maintaining relationships.
During a morning panel moderated by Frank Gruber, Co-Founder and Co-CEO of Established and Established Ventures, Frank Williamson, Founder and Chief Executive Officer (CEO) of Oaklyn Consulting, joined Jomayra Herrera of Cowboy Ventures and Brendon Schmidt of Sierra Ventures in a discussion about not only how to establish relationships with investors, but also how to maintain them in a positive and productive way.
As Williamson reminded everyone early in the discussion, the close ratio – deals considered versus closed – is one percent, so “There are going to be 99 nos.” Yet, as he and the other panelists explained, establishing robust relationships is critically important.
“One way is to grab a virtual coffee,” Herrera said in terms of starting a discussion, noting that “there’s so little friction to hopping on a Zoom these days. In some ways, it’s easier than it used to be.” Part of that is because people have more time.
Both Herrera and Schmidt discussed the value of “warm introductions.” Those can come from Founders of portfolio companies in which a firm has invested or from other firms with which it coinvests. That said, Schmidt reminded those who are seeking introductions to have done their homework to make sure their start-up is properly aligned with the interests of the firm.
On the all-important topic of maintaining relationships with someone who has invested in your company, Williamson drew on his experience working for venture capital-backed companies that have not grown as fast as anticipated.
“We see a lot of strained relationships,” he said, and advised Founders to listen to their investors, build and maintain a good dashboard, and be timely and responsive with information. Herrera reiterated some of those points and offered a few others. “It’s important to know what you don’t know,” she said. “Be upfront when you approach an investor. Don’t veil searching for advice when you are really looking for money.”
Schmidt said he liked it when “entrepreneurs are giving me homework.” Everyone agreed that frequent communication was important, not just regularly scheduled discussions or board meetings. While it was not described this way, the takeaway is how you would stay in touch with a close friend or interact with family members.
Later, the discussion turned to exits, and the panelists noted that raising capital requires a different set of skills than managing an acquisition or merger. “Hire someone,” Herrera advised, saying that a Founder “might do it once in their life.”