Whether it’s entrepreneurs “managing” their investors or investors “managing” their LP’s, there are similar steps that can create a good relationship and ease any tensions that naturally occur.
Todd Klein has suggestions here, which boil down to:
- Regular updates. Even if nothing has changes, monthly or quarterly updates will ensure investors or LPs know the current situation
- Strategic reviews. Assess current operating practices, in-depth analysis of operations, market position, competitive dynamics, strategic initiatives, and benchmarking
- Immediate sharing of news (both good and bad). Make sure team gets credit for good news, and most senior person takes responsibility for bad news
- Ensuring flow of information within investor groups by sharing detailed summaries of meetings with associates and other partners within the investor group
- Enabling investors/LPs to contribute to the success of the organization by identifying clear, easy and actionable requests
Note that all five suggestions require a constant flow of information. For investors/LPs managing a dozen or more investments, this would likely result in information overload. Fortunately, there are two factors that can alleviate this situation.
First, not all companies will communicate as frequently as they should, so an investor/LP with a dozen investments may only be actively involved with a small fraction of those.
Second, by clearly labeling, classifying and summarizing communications, investors can quickly determine whether each particular communication requires their attention.