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Zelkova's Jay Levy on investor-founder relationships

ProfitWell Dec 20 2022

What was it like the first time you started at a new school? This could be primary, secondary, or undergrad education. Take your pick. It probably felt pretty vulnerable, right? You know what it’s like at your previous school, but here it’s brand new. There’s a new building, new teachers, probably some new friends. It’s kind of like starting your life over.

This is not unlike what it’s like to start out as a B2B SaaS operator. Whether you’re starting a new job or starting your own company, it can feel pretty lonely. What really helps in both scenarios is having some sort of guide to get you through the tough times. At school it could be a counselor, and in SaaS it could be an advisory team. Even if you’re bootstrapped, you’ll need some sort of guidance along the way.

What’s extremely helpful is if you have an investment team on your side. I’m sure there are horror stories of operators who don’t get along with the investment team, which is why folks like today’s guest, Jay Levy, are so essential. In our discussion we went over the human element of running a SaaS business and how lonely it can get as a founder. Jay stresses, as a founder himself, how crucial it is to form a solid founder-investor relationship. All that and more in this episode.


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What to do today: 

  • Follow Jay Levy.
  • Schedule a time to meet with your leadership team to to discuss whether it’s time for an investor and the kind of investor that makes sense for you, your team, and your business.

What to do next quarter:

Find the right investor-founder relationship.

It’s well known how difficult it is to open and operate a business. What isn’t talked about enough though, are the lonely hardships that founders experience. Having a strong support system and advisory team would be ideal to help guide you through those tough times. And in SaaS, one area to look at to create a system like this is likely not one you’d typically think about as an option. In fact, it’s the least place you’d consider — your investor/s.

When you think about investors you likely think about them as strictly business and, a lot of times, even unpleasant. But, finding the right investor is key to the success of your business, and not only because they're providing the funding, but because they can also become that support system that you need. The investor-founder relationship is a business relationship, but it's also a partnership. As Jay explains, “It's very much like dating… it's a long-term engagement… ”

Founders can feel extremely doubtful about their vision at times. Having an investor that believes in their vision can make all the difference. Jay went into detail and explained to us what a strong and healthy investor-founder relationship should be and how to get it there.  

How to establish and maintain a healthy investor-founder relationship:

1. Get to know each other.

Meet in person and be honest and vulnerable. 
    1. It’s important to meet in person and see their eyes, how they react and respond. You get a true sense of whether you connect or not.
    2. Ask about each other’s inspiration. As the founder, what inspired you to start the business? As an investor, what inspires you to invest in it? This will help you understand the direction to take the business.
    3. Do you have a common goal around the business and its growth? 
      1. There has to be an alignment of values, as it’s the most important factor for the business relationship to grow in the right direction.
    4. Consider the type of investment both the founder and investor want. And get to a place that’s beneficial for both, and all parties involved.
2. Personalize the relationship

Even in business and investment relationships, bringing the human factor into the relationship makes it more successful.

    1. Sit with each other and discuss pain points, fears, and areas where help is needed.
      1. Founders should have the space and opportunity to talk and express themselves without reservations or fear of coming across as weak.
    2. Open communication and delivering on promises is key as it builds trust and loyalty.
      1. There will be differing opinions, but ensure both sides are considered.
    3. Investors and founders need to go through hard times together. Difficult times are inevitable, but they’re great opportunities to strengthen the partnership and attitude toward every aspect of the business.

3. Knowing when and how to listen

Good listening skills can provide you with a deeper level of understanding. 
    1. Practice listening actively to understand. Focus on what the other person is saying, instead of planning what to say in response, as you would during a debate or conversation.
    2. Take away any possible distractions like phones or laptops and have a focused conversation.
      1. Be present and pay full attention to what the other person is saying. Making people feel heard and understood is one of the most important ways to maintain a good working relationship.
4. Mentorship

Businesses who meet regularly with their investors are more likely to succeed in the fast-paced startup world.

    1. Being a startup founder is a full-time job and some founders start with a lot of fear and doubt, and as an investor you can help ease that fear by giving them the confidence that you believe in their vision.
    2. As an investor, spend some time understanding the skills and capabilities of startups and their founders and how you can encourage them to grow.

What to do within the next year? 

Whether you're a founder or investor, and depending on where you are in the process (in a partnership already or still looking), use the tips above to either develop your current investor-founder relationship, or to start off on the right path.

Keep in mind that this will be a long-term relationship, so take your time and be open and honest. It will only make the partnership stronger in the long run.


Who should own this? 

Founder and leadership team.


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