How do founders face your angel investors when a startup fails?

Intermediary transaction SEO diagnosis Taobao guest Cloud host technology Hall

Lead: It is a valuable lesson to look at the different ways in which the three founders dealt with the failure of entrepreneurship and what kind of courtesy they received at the end. Take your every investor seriously, regardless of the size of your investment.

The author is Ometria founder and CEO Ivan Mazour, translated from Forbes

Of the more than 20 angel investment projects I've been involved in, 3 have gone down the drain, and I've seen three different situations between entrepreneurs and angel investors. This is a very valuable experience for me because my own company Ometria and has more than 30 angel investors.

If you can treat your angel investors with absolute respect, integrity, and openness, you will not only be able to be peaceful, but also help you build a stronger relationship.

Case 1

The aspiring entrepreneur has no technical background, but has considerable experience in team management and a network of related industries. He has both affinity and strict character, enough to be respected by team members. At the beginning of the venture, his team members made a lot of money and then introduced a seed investment, and I was involved. The final board consists of two founders and one investor.

Other investors usually get to know the company's recent developments through the board's investors, not through the two founders. The only chance to reach the company's founders and the entire team is when invited to a company party, which is usually held at some luxurious restaurants and clubs, and delivers high-end gifts on the spot.

But after the company's business encountered an unusually fierce market competition, the unit economic benefits are not ideal, the company quickly ran out of all the cash or even the ability to carry out the next round of financing. Just one months before that happened, investors also received news that the company was running smoothly, saying there was money to go, and investors could follow. But everyone is still in the dark feel all calm, suddenly received the company liquidation Mail notification.

In this case, the investment people have threatened to sue, angry mail ensued. The founder called me and asked Whimpered, "Why are we so, the board has made such a difficult decision and I have to fire my entire team, which is terrible." "All relationships are broken and everyone is spellbound.

Case 2

Two founders, young and energetic and successful. Some of the most important investors were involved in the company's first round of financing, including a Ometria key figure. The company's business is "socially beneficial" in nature, so it is easy to invest. There's not a lot of commercial traction, but it's a worthwhile investment for someone like me who has an investment mindset about people being wrong.

After a period of time, the company did not get any development, the market has not formed. The two founders worked very hard, but did not have the funds to form a strong team, only to be pro-Pro. They have a lot of good ideas, but they don't have enough resources to carry them out. The company did not have the funds to try to raise money, but because the market attractiveness of the company's business did not improve during this period, it had to end in failure.

One of the founders, whom I didn't know before, even moved quietly to other countries, where they worked remotely for several months. The company had little money left, and the founder I knew sent me an e-mail told me he was going to resign as CEO, transfer his position and shares to that partner, and his partner would cut his personal salary, but it would give them at least half a year to get the job back.

I still have a friend with the founder and a business relationship. Other investors are puzzled, though no one is furious, but apparently they have lost faith in the company because of the two founders. The decision is like one of the CEOs trying to get away from the inevitable disruption of the company's liquidation, leaving another with a little more time to find a way out. The incident did not, in the end, cause much of a reaction, but the investment people slowly began to ignore and stay between indifference and loss of respect.

Case 3

The last one, a clever academic founder, spent several years starting a business and looking around for the right business model, and his small team consisted of a group of college students. When he first came to me to invest, I refused, because I think his product is not mature enough. But soon, a seed fund and a well-known incubator injected money into his company, and I found that their assessment was done in a kind of model, plus I knew the founder, so it was a good investment opportunity.

Then the next year the company began hiring, trying to do everything well, to achieve the product and market fit, and this is actually what investors thought has been achieved. When it comes to financing, there are a lot of paying customers, but then these people leave quietly. In the second round of fund-raising, because the product's market is not attractive, raising capital is also a bad result.

The founder of the early warning to investors, he came out to explain the product and team problems, explain the company's remaining time, and seek every investor's advice and help. These views are often emotional, but they are also constructive, but they are still at the end of their tether.

He has again made further investments to investors, or the company will have to close. He explained that at present not only with the existing investors in contact, but also in contact with other investors, but financing is almost impossible. He said the only way left was to sell intellectual property and ask investors for referrals. The idea was then implemented and made available to investors on a regular basis to keep abreast of the latest developments. Some companies have expressed a willingness to buy, but even on sale in a short period of time it seems impractical. In the end, the founder could only send an email informing the company that the next step would be to appoint a liquidator.

Everything began, including investors, all of whom were involved in the signing of the relevant documents, and the company was shut down. The founder then wrote a long email to every investor, thanking them for their companionship and leaving their blog addresses with their own entrepreneurial experiences and ideas in the mail. It is a very sincere words from the heart, very interesting and valuable.

I replied to his email and replied to all the investors at the same time. I wrote word: "I really want to tell you that you handled the company well." Your commitment to the right to know throughout the process is a good proof of your humility and ability to learn, even in such a stressful and painful time that you have not alienated anyone. This is one of my three failed investments, but you have demonstrated a greater sense of responsibility and leadership than other founders in the process. I'll wait and see what your next plan is. ”

Almost every investor responded to this email, supported my views and reiterated their support for the founder. "I totally agree with you and wish you luck on your next venture!" I agree, keep in touch, hope to see you again. "So am I." "Agreed, very professionally handled. "I am sure you will find the next entrepreneurial project and use this experience to break through." ”

I feel that I have no negative feelings about the founder, but I have a little more respect. If he needs a letter of introduction one day, I will write it for him. He failed to make the project work, but he did the best he could, and he gave all the investors absolute integrity and respect. Yes, we lost the money, but seeing him deal with all this, we didn't complain that the investment itself was risky.

It is a valuable lesson to see the three founders deal with the different ways in which they failed to start a business and what kind of courtesy they received at the end. Take your every investor seriously, regardless of the size of your investment, your right to know, and always ask for advice, so you build a stronger and closer relationship, even if your business fails. (Han Lin)