The most valuable investors to have on your cap table are the ones that make a material impact on your business when times are tough. Lily Lyman is currently on the front lines supporting Underscore VC’s portfolio companies through this downturn and shared strategies for how your investors can help your business reclaim pre-crisis growth rates.
MORE ABOUT LILY LYMAN
Lily Lyman, Partner at Underscore VC, leads the firm’s investments in Future of Work, AI/ML, Insuretech, Commerce, and beyond. Lily has a background as a founder, investor, and operator in mobile technology. She came to Underscore VC from Facebook, where she worked in product strategy focused on the international growth of core products including Facebook, Instagram, WhatsApp, and Messenger. Prior to Facebook, Lily held a variety of strategy, operational, and entrepreneurial roles. A founder herself, Lily co-founded an Agtech & CPG startup while at Stanford.
Do worst-case scenario planning: expect no new funding and no new revenue. What does your cash burn look like? How could you make this work?
Ask yourself: How do you treat your current customers like prospects? Keeping existing revenue will be key this year because it’ll be easier to up-sell or (even just retain) your current customers over landing new ones.
Use empathy while thinking about customer retention. How do you increase the lifetime value of a customer? How do you position yourself to be a true partner for your customers? How do you add value and prove that value?
If you’re considering giving pricing discounts, name it and have an end date. As an example: “the 3 month COVID-19 discount.”
Help with customer introductions:
You and your investors are super aligned right now. Your interests and short term goals go hand in hand. Ask them: what will move the needle? What’s the most important thing for us to focus on right now? Investors are able to focus more of their time on their founders compared to pre-COVID19 times, so keep the dialogue open.
When approaching current investors for new customer introductions, be clear and straight forward. Be tactical. Send over a list of 3 people you’d like intros to. Send over a blurb or email draft the investor can use. Reduce the friction. Make sure your ask is clear.
Support with hiring:
This is an excellent time to scoop up talent with all of the recent layoffs. Share the JD and potential candidates with your investors. Ask if anyone comes to mind who would be a great fit. Ask if they can send the JD out to their network.
Your investors may be willing and interested in helping screen candidates as well as close candidates. Your investors can speak authentically about you / your startup because they believe in what your’e doing and want to see you succeed and grow.
Feedback on product development:
If you’re asking for advice on your product roadmap, keep in mind that investors don’t necessarily have deep functional expertise on what you’re asking for so use them as a sounding board instead of over-weighing their opinion. With product roadmaps, it’s always go back to what you’re hearing from your customers.
Finding new investors:
Warm intros from current investors will be critical right now from your investors whether for bridge funding or raising your next planned round. Investors are still investing but pace has slowed down a bit. Investors are still getting used to this new environment. They’re not able to meet new founders in person, but having more references who can vouch for you can help compensate for the lack of trust from having no in-person interaction.
In terms of raising money, ask new investors: What is your process? Are you investing right now? What will you need to see to feel conviction about this product? What is your timeline? Finding the right “funder market fit” is key.
Thank you Lily for taking time out of your day to share your expertise with the greater Venture Lane community!
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