February 21, 2022

Why investor EQ is critical to success

When I contemplate the success factors for entrepreneurs from different parts of the world, the list usually includes things like the market environment, business style, government policy, and talent cultivation. However, there is another key differentiator that most people don’t pay attention to: “investor EQ”.  

Asian culture tends toward quietness and restraint, which can hamper entrepreneur and investor relationships. The way this plays out in the startup space is that Asian entrepreneurs end up seeing investors as “bosses”, and therefore are only comfortable engaging when they have good news to share. They don’t want to “bother” investors with bad news.   

Of course, it’s totally understandable for entrepreneurs to want to present their best selves in front of investors so as to receive more support and trust. However, we all know that the startup road is not always a smooth one, and the challenges are not the kind that one can face alone. By distancing themselves from investors, entrepreneurs are missing out on opportunities to leverage the multivarious resources that investors can offer. 

It’s the opposite situation with Silicon Valley startups. I once met an entrepreneur who sent out a monthly newsletter to his investors with a “thank you” section at the top: for example, thanks to investor A for helping me find talent, investor B for the referral, investor C for assisting with the next round of funding, and so on. Frankly, the investors who didn’t see their name felt a little guilty! In this situation, an investor is more likely to proactively think about what kind of resources they can provide to their entrepreneurs.    

Here is another example. I was once at an event where I met an entrepreneur whom I did not end up investing in, but I still received their monthly situation report. Eventually, I ran into them again and we already had a natural rapport and had a lot to chat about.

A lot of the Silicon Valley entrepreneurs we invest in like to open up to me about the different challenges and aggravations they face as a startup leader, which makes us feel much more like partners and friends. This kind of foundation enables trust and makes it more likely that entrepreneurs will receive the support they need in critical moments.     

Even though investors cannot solve all problems with a magic wand, if entrepreneurs work to deepen the relationship, they will receive unexpected benefits. That’s why I strongly encourage all entrepreneurs to get past the fear of “bothering” investors and to take advantage of the various resources investors can provide. The value of an investment need not be limited to funding or stock shares but can lead to even stronger startup / investor synergy.

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