Business

The Importance of A Close Relationship Between Investors And Entrepreneurs

What do investors and entrepreneurs have in common?

Very often, the same ambition, goals and skills. While there are differences in their approach to investing and their business focus, they also have several factors in common, preparing the ground for a good relationship.

Here’s why investors and entrepreneurs should spend time building a solid foundation.

Building An Empire

Sometimes, two is better than one. If you combine your skills with the experience from another, this could be a highly successful cocktail.

Let’s take one example. If entrepreneurs and investors collaborate for a common cause, the industry and both parties could benefit — a win-win situation.

This is why Swedish Nicolai Chamizo from Incore Invest stresses the importance of forming a close bond with entrepreneurs and management teams to expand their business.

Incore Invest has invested in European tech with companies like Brite and Mynt. Supporting other entrepreneurs is at the core of Incore Invest’s vision.

By investing in new tech startups, they strive for entrepreneurs to become leaders in their fields. Therefore, they are on a mission to start the new “fintech” unicorns.

Trust Is Key

On both sides of the partnership, there might be different goals. The entrepreneur will likely have a long-term perspective to grow their business and remain in control.

On the other hand, the investor often invests within a short period of 4-5 years. Before investing, the investor will likely ask questions regarding the entrepreneur’s competencies.

The entrepreneur shouldn’t necessarily have all values aligned with the investor’s. However, the entrepreneur should understand their point of view.

Likewise, the entrepreneur would most likely want to know whether the investor cares and believes in their project and previous experience with other entrepreneurs.

Investors who trust their startup are more likely to invest their resources. When both parties can retain high trust, this will strengthen the relationship.

An Experienced Mentor

For the entrepreneur, the investor doesn’t just have to be a source of capital. They should also act as a mentor, available for guidance.

Most investors today have years of experience and have most likely been in the same spot as the entrepreneur at one point. Startups can gain valuable knowledge and expertise by connecting with their entrepreneurs.

The investors can give them strategic advice and help them navigate any potential challenges to have a stable foundation in the future.

Not only is this beneficial for the entrepreneur, but also for the investor, since their advice and guidance can lead the startups to success.

Gaining Access To Networks

In business ventures, networking is crucial. This is the way for entrepreneurs to reach out to new potential partnerships. This should be easy since investors have networks and connections in the industry.

By building a strong relationship with each other, investors can reach out to their networks, which opens a door for entrepreneurs.

This can be everything from customers to supplies. By networking through their investors, entrepreneurs can expand their opportunities in their business.

How To Build A Successful Relationship

While there are many benefits to having a good relationship with your investor or entrepreneur, it takes work. Therefore, you should consider different strategies.

A good first rule is working with an investor determined to build a strong relationship with the entrepreneur. This requires research, but it is worth looking up the investor’s criteria and interests to know their goals.

There are different ways to meet potential investors, but events and conferences are an excellent way of doing so. Here, you can meet new people, show your ideas and build connections.

Trust and honesty are two critical elements for building a good relationship. Therefore, entrepreneurs should always provide accurate information, even if it is terrible news.

This way, the investors will have a better chance of realising their potential.

Editor

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