These 4 Insider Tips Are the Key to Securing Loyal Investors

A strong network of investors is essential for any entrepreneur. These connections can open doors and write you a check when you need it most. If you’re lucky, investors may continue to support you well beyond your current business. But mastering investor relationships is a complex process.

Sure, there’s research out there that covers the basics like making a good first impression, delivering a great pitch, making sure your investors are the right fit, etc. But there are also some hard-learned tips you can only hear from an insider.

Based on my experience as a founder who made 200x returns for my first investors, and my current role as a venture capitalist investing in over 50 startups, I’ve learned some practical tips along the way.

Related: 5 tips for a successful entrepreneur-investor relationship

1. Approach investors long before you’re ready

Avoid the typical hectic process of pitching to investors you’ve never met before on a tight schedule, as this comes across as transactional and gives investors an excuse to say no.

Aim to emotionally engage investors and make them feel like they know you personally from the beginning. To achieve this, you should approach potential investors earlier than traditional advice would suggest, even if your idea feels immature. Be sure to communicate that you are not fundraising, but are looking to build a relationship before any potential funding.

It may take some time to schedule a meeting because there’s no urgency, but if you’re persistent in following up, you’ll eventually meet and have the opportunity to have a genuine conversation instead of a high-pressure sales pitch.

Try to make two new connections like this every month. Over time, this will grow into a larger network that you can tap into when you finally need some cash. When that time comes, you won’t feel rushed and your opportunities will be more favorable.

During my tenure as founder, VangleI’ve implemented this strategy in several funding rounds. At one point, we had seven competing term sheets for our $17 million Series B funding, and it only took a couple of text messages to get the first offer.

Related: 4 Expert Tips on How to Network to Find Investors for Your New Business

2. Don’t share good news until it’s 100% confirmed

When meeting with investors, make sure to only share numbers that you are confident you can hit. Under-promise and over-deliver.

You’ll find that some investors have an uncanny ability to remember every detail from previous meetings. Know that they’ll be taking notes after every meeting and uploading their thoughts to their customer relationship management (CRM).

When I meet with entrepreneurs on behalf of a venture capital fund Bluefield CapitalI keep a record of all the important facts that founders tell me. Sometimes I come across founders who make a big hype about their business and then end up disappointing. If I notice a repeated pattern of this behavior, it will erode my trust in the founders and make me less likely to invest in them, which is exactly what you want to avoid.

It’s better to only share positive news if you can confirm it. Don’t get into a situation where you have to justify something that didn’t happen, like not landing a big customer or revenue only growing 50% instead of 75% (50% is usually great growth).

Another tip: Be open about the challenges you’re facing and ask your investors for their advice. Then explain how their advice helped you overcome the obstacle. This approach fosters an emotional connection and creates trust.

3. Raise capital from new investors

Once you have finalized your investors for your funding round, ask them to introduce you to at least three co-investors that they recommend. Note: Before asking for introductions, get clear verbal or written commitments. Otherwise, you risk that one skeptical investor is all it takes to convince others, causing potential investors to abandon their investment.

Instead, you need strong references to back your deal. Investors will view an opportunity as risk-free if another investor they respect has already conducted due diligence and is 100% committed.

I witnessed this firsthand when I came to Silicon Valley as an immigrant with few connections to the US and raised a $2 million seed round from 30 different investors, primarily piggybacking on the commitments and introductions of my first investor.

Related: 7 Ways to Maximize Mentoring Relationships in Business

4. Follow through on your investments

Unfortunately, some investors lose contact after investing in a company, and while they want to give founders room to run, they also need to keep their own investors in the loop (yes, VCs have investors called LPs too).

If you believe that your investors should update their LPs quarterly, then you need to realize the importance of sending updates to your investors at least quarterly and at least monthly. Don’t ignore your investors.

Whether you deliver news in person or virtually, you should always provide a formal written update. Start your update with key metrics such as revenue, cash balance, and cash runway, ideally presented in an efficient format such as a table or graph.

Don’t make investors read a lengthy update without first addressing your headline items, or they’ll end up skimming the presentation looking for this information and risk losing their attention.

Related: What is the venture capital due diligence process? Here’s a step-by-step guide.

If you make investors’ lives easier, they will value the way you operate and will want to continue working with you. This is how “repeat founders” or “serial entrepreneurs” cleverly raise large amounts of capital for their next venture, often without regard to the performance of their previous company.

Investors make decisions on an emotional level, and by following these insider tips, you can build trust and manage your investor relationships like a pro.