The day after you close your round and the money hits the bank, you and your investors are all on the same page.
You’re focused on growth. You are going to grow your valuation and vault into the next fundraise in 2 years.
Your investors will get to mark up their investment in your company. And you will continue down the path toward the big exit that declares everyone a winner.
But let’s face it. Most startups fail.
Early stage investors know this. They place a lot of bets, knowing that most will fail. Some of their portfolio companies will get to an exit that barely returns their original investment. They hope one or two are the outsized wins they need to make their overall fund performance strong enough to allow them to keep raising money from investors for their next fund.
Investors are constantly trying to figure out which of their portfolio companies are the potential big winners, and which ones aren’t going to have a positive impact on their portfolio.
This shapes the amount of time they allocate to each of their portfolio companies.
And it can create a disconnect in the alignment of goals between the founder and the investors.
Which can color the quality of the advice founders get from their investors.
So if most startups fail, or will at best deliver an outcome that doesn’t deliver returns to their investors, this means that at some point most companies aren’t completely aligned with their investors.
The question is, can you spot when that happens? Will you start to process investor advice and feedback in a different way?