Noam Kaiser is an investment director at Intel Capital, focusing on investment opportunities in Israel, primarily in the Cloud, DevOps, Dev Tools, SaaS and Semiconductor segments. He currently serves on the boards of Overwolf, Cellwize, Pliops, ProteanTecs, Centrical, Model9 and DustPhotonics, and he served on the boards of Alcide and Panoply ahead of their acquisitions.
Prior to joining Intel Capital, Noam was the VC business development manager for AWS in Israel, Spain and Portugal. Before that, he was principal at Gemini Israel Ventures, and Ofer Hi-Tech, early-stage focused VCs in Israel, where he participated in such investments as Jfrog, WalkMe, Samanage, Flok, Implisit, CmyCasa and more. He was the founder and CEO of cloud based financial solutions startup VentureApp, ahead of its merger with Balink.
Whenever I meet founders at events, workshops, or online, I’m asked a variety of questions about the path towards funding. They want to know what to include in their pitch, how to prepare a budget, how much to raise, from whom, and when. While all of this is important and these are definitely things you need to know, no one asks me about what happens the day this fundraising activity actually becomes successful.
Let’s say it worked, the money is wired into your account, and everyone says congratulations. The big question is: Now what?
Preparing for investments this way reminds me of a young couple I know who spent half a year planning their wedding day in great detail. The thing is they didn’t spend any time planning or thinking about their life together or building a family, and that part is the real story. Like marriage and childbirth, the investment agreement is not your final destination. Rather, it’s an important milestone at the beginning of a challenging—and hopefully successful—relationship.
The real story begins the morning after.
It’s all about people
This is a relationship that will surely be a rollercoaster of ups and downs and will last for years. Successful management of this relationship—understanding what it will require of you and how you can benefit from it—can be the difference between your startup’s success and failure.
You need to start managing this relationship immediately.
Let’s start with the most basic fact: there is no role lonelier than CEO. Even if you are a cohesive team of entrepreneurs, things change when one of you becomes CEO. The responsibility for the company’s success is undivided, and the weight of making difficult decisions is undivided. You are the final decision maker on all key matters.
This is where the investors are supposed to come in. They should provide a pool of knowledge with a broad perspective, which is built on their experience, their partners’ experience, and the experience of startup CEOs with whom they have worked before. Each investor differentiates themself and adds value through their willingness to share their knowledge, time, and attention.
And that gives you an opportunity, but also a responsibility, before you raise the money. You must understand who is joining your company, since it will also be their company. Once the money is wired, it is too late to start trying to figure out who you brought into your home and whether or not the relationship is going to work.
Finally, there are the employees, both present and future. These are the talented people who helped you build the company, a company that convinced investors to take a risk. They are also the people who will be the most critical component in realizing the vision that all of you share.
Now, let’s think about how you interact with these people in their various roles, once the money is in the bank.
Let’s talk about the elephant in the room: the board of directors
Once you have taken an investor’s money, you have also taken on the added responsibility of managing that money wisely. A solid board helps make this job easier.
The board is entrusted with monitoring the progress of the product, business, budget management, and manpower. Alongside management, it should identify opportunities, risks, help outline a plan, and approve it.
The company’s board should not be a bunch of cheerleaders. A good partner knows and wants to congratulate you on a good job and successes, but mostly a good partner should tell you what you need to hear, not what you want to hear. Communication is of the utmost importance. There is nothing that gives investors more confidence than a CEO that they know, beyond any shadow of a doubt, will update them with important news, especially when something is not going well.
When we, as investors, know that the CEO will not surprise us with issues that have been brewing for some time and that she or he will reflect the development path of the company in a transparent and precise way, trust is created. This trust provides peace of mind, it gives confidence, and this trust manifests itself both on an ongoing basis and in subsequent rounds and subsequent points of hardship.
Frequency of communication
Anyone who expects communication with investors to be limited to four board meetings a year does not understand what they are doing as a CEO. On the other hand, it is important for investors to understand that a CEO needs time as much as they need money, so investors should think carefully about the amount of interaction, especially when there are already four or five investors around the table.
As CEO, you should adopt a proactive approach in communications. Set a time for regular half-hour calls every month. As time goes by, both parties study each other and understand what is required and what is welcomed.
With funding, it’s not just about managing the board and investors. It’s also about guiding the people who are helping you achieve the vision that garnered the investment.
The morning after is a great opportunity for you and the whole company to stop for a moment, evaluate and sync over the goals of the company, the personal goals of each employee in the company, and where each of you and the company itself are in relation to said goals.
The morning after is also the perfect time to focus on a critical asset that your company will always need: talent. The long-awaited TechCrunch story will be out there. Now everyone knows that there is fuel in the tank, that another VC fund is putting its weight behind your startup. Take advantage of the momentum.
Everyone says “congrats” to the CEO over raising a round, but what really needs to be said is “good luck!” A financing round is a commitment, there are goals that need to be reached, and if there is one factor that affects meeting or not meeting these goals more than any other, it is success in recruiting people, in terms of quantity, quality, and speed. Act accordingly.
Rewarding current employees
While we are on the subject of talent, there is quite a bit of talent that has brought you to this milestone. With fresh capital in the bank, this might be a good time to reward them. While admittedly “effective employee compensation” is a story for a series of blog posts in its own right, let’s touch on it briefly in this morning after context.
In the contexts of compensation and recruitment decisions, the CEO should not be alone. It makes sense, if you haven’t done so yet, to form a compensation committee from within the board. It shortens the process and saves you from getting the whole board to deal with these topics from A to Z.
When it comes to “the morning after,” it’s not possible to cover everything in a single post, nor in a series of posts. But I hope I helped you think about your to-do list so that you have a plan when the day arrives.
I will end this blog by saying how much I love my role as a partner in a venture capital firm. There is nothing else I would rather do. I like to formulate investment theses, I love meeting new teams, and I love deep diving into companies and moving towards an investment. I like the research of a new field towards investment, but above all, I love working with my CEOs—especially in those moments when I manage to make a significant and positive impact on companies.
The days that make me smile the most at work are the days when a CEO sends me a “Thank you!” WhatsApp message, especially when I know I earned it.
At the end of the day, it’s all about people: people and the relationships between them.
To learn more about what to do when you complete a successful round of funding, sign up for Microsoft for Startups Founders Hub today.
Tags: compensation, Intel Capital