Inexperienced entrepreneurs often believe that venture capitalists are merely a source of funding, but they're also an invaluable source of expertise for making your company successful. VCs need to know as much about your business as possible to provide you with expert guidance on running your company. Common techniques for keeping VCs informed on your company include the following:
VCs will typically require a seat on your board of directors before they will invest in your company. Keep VCs informed with board meetings by presenting them with information from other meetings such as strategic planning sessions and weekly status updates. This strategy will save time by providing VCs with multiple sources of information in a single meeting and give them detailed insight into your company.
Invite VCs to spend working days at your company, encouraging them to freely walk around the facilities and talk to employees. This activity is part of a VC's due diligence process for investment, especially in small businesses. A visit to your company allows VCs to examine your company's daily operations in great detail, including the manufacture of products and provision of services. A VC will frequently use the observations from this visit to develop a term sheet that describes the conditions under which a VC would be willing to invest in your company.
A Customer Relationship Management system is a way for a company to track interactions with its customers. VCs should have access to your CRM data at all times so they can assess the level of customer interest in your company and the manner in which it handles the sales process. They will also be interested in data on your marketing campaigns for all distribution channels, including direct mail, email, telephone, search and social media.
VCs also need curated information about your company, which is normally available only to upper management. Create a secure account for sharing these sensitive documents and organize them in a logical manner. Add new documents to this account as they become available, so that investors can investigate your company's activities as deeply as they wish and on their own time. Track your investor's review of this information with audit logs so that you can follow up with additional documents that interest them.
Send VCs reports about your industry so they can tailor their advice for your business. This strategy allows you to take a proactive approach in keeping VCs engaged in your company and up-to-date on the industry, which is influential in the VC's decision-making process. A sound investment decision requires the VC to understand the economy in general to keep an analysis of your business in perspective.