Why you’ll raise more money if you trust your team

Photo credit: Paul Want

Founders often start off on their own with nothing but a bold idea and the guts to see what happens next. They bootstrap and scrap their way forward. Then, they have a few wins, either make or raise a little money, and get excited to hire a team and take a few things off of their plates.

Often, new team members have different ideas about how to execute or even where the company should go next. But the founder is used to doing things in his or her own way.

Managing people, on top of trying to move the company forward, can also be hard and frustrating. So sometimes, a founder will revert to how the company started —where he or she does everything.

In the heat of the moment, it can seem easier. But in reality, it can keep you from raising much-needed funds.

If you don’t trust your team to do their job, here are some of the things that can happen.

Lack of trust causes “timeline creep”

As a consultant, I am often brought in to help with fundraising, a strategic partnership, or both. People hire me because I have raised millions of dollars and sat in thousands of investor meetings, and I have been on both sides of the table.

If you are not meeting timelines that you lay out to investors, you are not executing. And if you are not executing, investors will not want to invest.

Founders are often very nervous when I first reshape their investor presentation. Some founders I have worked with were so nervous that corporate decisions were put off for weeks. In one instance, the founder spent days haggling over whether a pitch deck could be 45 slides for a 20-minute slot. There was a domino effect: we would end up repeatedly updating the timelines we told investors.

Founders know their business better than everyone else, but I was hired for my specific expertise. Going back and forth about every detail only wastes time and, even worse, detracts from the day-to-day operations of the business.

More importantly, investors can see if unrealistic timelines are laid out or if realistic ones are not met. Execution is a critical component of a functioning company. If you are not meeting timelines that you lay out to investors, you are not executing. And if you are not executing, investors will not want to invest.

A disempowered team will not solve problems when you hit a bump in the road

Part of raising money is telling investors what to expect from your company as well as when to expect it. For example: In January 2019, we will have positive clinical data on a product.

I mentioned timeline creep above —when the data outcome is pushed to February, March, or beyond. But the other possibility is that the data is not positive or is something you did not expect. It takes time to work through the best takeaways from surprising results and figure out how to move forward.

Without trust, your team won’t feel empowered to make decisions or out-of-the-box suggestions. They won’t work to figure out the solutions to the inevitable bumps in the road. They will sit passively and await your decision.

If you don’t trust your team, investors won’t trust you