How To Manage Your Investors During A Crisis

The panelists for this session were; Charles Murito– Google Regional Director, Sub Saharan Africa, Government Affairs and Public Policy, Teresa Mbagaya– Principal, Imaginable Futures (A venture fund of Omidyar Group), Jihan Abass Founder and CEO Griffin/Lami. The session was organized by WomenWork. This was the last webinar for #investinyourself series for the month of May.

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This was a very eye opening session, especially if you have investors in your businesses or if you’ve ever thought of being a board of a startup/small business

Below are some of the lessons I gathered;

A lot of businesses have investors in one way or another. So why do people invest in other businesses as an Angel investor? Charles Murito outlined some of his motivations to be a) Job creation, b)ideas and business owner alignment. That they can understand the problem that they are solving, passionate, and that they would be highly likely to succeed.

Before COVID-19

Reporting- Startups have different reporting mechanisms; weekly, monthly, bi-annualy. Most of the reports cover important metrics such as key growth metrics, milestones achieved within that period, challenges, projected milestones. It’s also important to outline, how you need help, and how the investors can be able to help. This could be a quick call, email or outlined document.

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Crisis Mode

Investor- Investee Expectations during the crisis

  • Communication; Communicate to the shareholders on future prediction, and how it affects the business with an overview of what can be done, and how can they help. Transparent, clear and honest feedback. This should cover, what’s good, what’s different, what they should care about? How can they support? Be in the know; Know what your investor is keen on, and provide high level reports.
  • Planning for the long haul; This is covered through scenario planning incorporating best and worst case scenario, and communicate to the investors/funders early. Scenario planning should also be done when the business is also doing well.
  • Think differently; Some of the things one can think of are; Pivoting of the business model, potential partnerships, changes on delivery model. Business model rethinking of how the next 12-18 months would look like. Relook and explore export as some countries open faster than others.
  • Solid financial understanding of the business. Return on investment is key for investors, but it shouldn’t be at the detriment of the business. It should allow the business to thrive.
  • Confidence from the CEO to ask for help from shareholders. Not only are funds important, but also networks and resources that can be provided to spur growth. Surround yourself with people you can count on as investors.
  • Ask for help; Fundraising for cashflow, thinking about long term and be willing to listen.Different startups and SMEs require different things such as cost reduction matrixes, introduction to partners and synergies or additional funding.

Leadership and Business

  • Two way expectation: It’s not about your expectation as an investor, but also what are their expectation towards you as the business owner.
  • Identifying a working partnership that works between the investors and the owner of the business.
  • Keeping the investors updated on what has changed, what hasn’t. You can report weekly especially if its early stage startup
  • Finding the right fit between businesses, business owners and investors as this could affect communication during a crisis.
  • Be absolute ruthless with Cashflow and expenditure. Tips; Conserve cash, and incorporate creative ways of bringing in cash.
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You can re-think through the following

  • Are your investors aligned to your pivot?
  • What risk averse opportunities can you seize?
  • What are you well positioned for? eg. Going digital
  • What are the current customer demands?
  • What is attractive to investors in your category?
  • How flexible are you on valuations and negotiations on investor terms?
  • What different types of funding that are industry or cluster specific can you explore? There has been an increase in grants by industry or cluster.

Some of the changes that might happen post COVID 19

  • It will be harder to raise funding. How can your business survive nonetheless?
  • How much longer can your business survive?It will take longer to get back to the new stable normal.

This was such an informative session. You can know more about WomenWork here. I have also written about other sessions, you can find my learnings here

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