Funding Your Business: Why It’s Critical To Keep Your Investors Involved

Funding Your Business: Why It’s Critical To Keep Your Investors Involved


Your confidence is growing, you have successfully landed that investment. You have a swaggering bank account, a budget to spend and a business plan to reach the stars.

Next challenge – how do you manage your relationship with your new shareholders? One way to do it, is to say: “Thanks a lot, see you at the next annual general meeting”. And many business owners do just that. However, based on my experience, that is the last thing you should do.

Allow me to explain why you shouldn’t take that approach (and, in some cases, why you can’t).

Include and involve where possible

Generally, shareholders will have minimum legal rights to information under law, which means that they will have little insight into the operations and dealings of the company: Financial statements, minutes of shareholder meetings, the Memorandum of Incorporation and the various registers reflecting the shareholding and directorship of the company.

Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds

Although some investors – such as series seed, venture capital or private equity – enjoy significantly more rights and involvement, you will still do well to always provide them with as much information, insight and opportunity to contribute as possible.

Don’t let the minimum legalities guide you. Rather think of your company’s overall health and the importance of keeping all stakeholders happy and on board at all times.

Think beyond financing


Shareholders should continue to be important to you long after funding has been provided. You didn’t bring them on just for their money (I hope!). You brought them on for their skill sets, experience, strategic input and business network. Their input and guidance to the founder group should revolutionise your business.

In many ways, it is too good to be true: Not only did you get funding, but you got seasoned campaigners who are committed to be your full-time mentors, business consultants and networking agents.

The degree to which you take advantage of this gold mine depends entirely on how well you communicate with them. The best start ups tend to have a CEO who is an excellent relationship manager – and treats investors as leverage for their own skills and experience. He draws on them continuously and values their input.

Related: South African Government Grants

Investors should be invited to contribute significantly to the business model, strategy execution and indeed carry each trial and tribulation faced by the board.

For better or worse

Then there are the tough times. Every start up will face them. As with every relationship, your investors’ response to these incidents depends on the health of the relationship – are they convinced that the founder group is dedicated to running the company in their interests? This is the gold standard of investor relationship management.

If you can achieve this, then your investors may well present you with the solution and even the continued financial support to overcome difficulties.

We’ve seen this exact situation unfold. And when the investors continue to support through tough times, it significantly improves the trust and integrity of the relationship. It also sends a powerful message to the market that the company’s fundamentals are healthy and that the management team is backed by its shareholders.

No surprises

Lastly, transparent and regular communication with shareholders means that significant requests (such as another funding round that dilutes everyone’s shareholding) are not treated as a surprise, which could potentially put them on the defensive. Rather, these requests are seen as predictable, planned decisions that they were involved in.

Related: Before You Pitch Investors, Ask Yourself These 4 Questions

In closing, if you would like your business to grow from strength to strength in this temperamental economic climate, the best thing you can do as business owner or CEO is to treat your shareholders and investors as integral members of your company – rather than external sources of finance. Value them, include them, draw from their wealth of experience – and your business will endure any storm.

Adrian Dommisse
Having established Dommisse Attorneys in 2008, Adrian’s firm offers corporate finance and commercial law, with a strong focus on providing start-ups with the legal support they need. As the founder, Adrian thrives on guiding clients in the start-up space, by understanding their products and helping them take their businesses to the next level. With over a decade of experience in law, he is eager to use innovative ways to help his client’s gain value.