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Raising funding is no easy feat, especially for first-time founders. You need a solid business plan, traction to demonstrate market fit, and the skills to pitch effectively. Yet founders often trip up when it comes to investor relations — the ongoing communication and relationship building after that first check clears.
“We’ve seen companies make mistakes managing investors that have cost them dearly down the line,” said Michael Mohammadi, CEO and co-founder of StormX, an investor relations platform. I sat down with Mohammadi and his co-founder, Eduardo Fonnegra, to get their tips on avoiding common investor relation pitfalls.
1. Don’t get caught up in short-term fundraising
It’s tempting to focus on immediate fundraising needs without considering the long-term ramifications of taking on certain investors. “A lot of founders get caught up in just meeting the first couple of investors who can give them money,” said Mohammadi. However, not all money is created equal.
The wrong investor partner can hurt you down the road, especially if their priorities end up misaligned with the direction you want to take the company. Evaluate investors thoroughly, not just based on the size of their check, but whether they can provide strategic advice and introductions that support your vision. With the right investor relationships, fundraising becomes a byproduct of building something great.
This tendency to prioritize short-term gains over long-term success is an example of the cognitive bias known as loss aversion. Founders are so anxious to avoid the pain of missing payroll or running out of cash in the near term that they make hasty decisions on investors that cost them later. Being aware of this bias can help founders take a balanced perspective.
2. Don’t neglect ongoing investor relations
“A lot of startup founders think that the only way investors will respond fav… Read More
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