The importance of helping investors “Invest in lines, not dots”
I first heard of the phrase “invest in lines, not dots” when I joined Techstars in late 2015 and was introduced to Mark Suster’s blog article by the same title.
The summary, investors want to get to know you over a period of time. Each interaction is a “dot” in time. Over time, investors want to have multiple dots that they connect into a line so that they can get a better picture of the entrepreneur that you are and whether you can execute. Knowing that, build many “dots” with the investors that you want on board by starting to speak with them a lot earlier than you think you need to and more regularly than you most likely are (we recommend at a minimum an email update to investors every 4 to 6 weeks sent out consistently).
This week, I saw this play out in two separate events. A company I’m invested in received a MM$ term sheet from an investor I introduced them to in October 2016 and another company (that I’m not invested in) just announced that they closed their MM$ Series B round led by an investor that I helped facilitate an intro to back in November 2016.
Each deal started with a casual intro that after the first meeting, neither the investor or entrepreneur knew would eventually end in an extremely valuable partnership and deal. In each scenario, the entrepreneurs kept the investors consistently up to date with the progress that they were making giving the investors enough time to build a more complete picture and conviction that these were the startups to back. In turn, the entrepreneurs also got a better sense of which investors kept most engaged with them, were most helpful along the way and which they’d most like to partner with as well.
So if you haven’t read Mark Suster’s article, go ahead and read it and if you aren’t already updating your current (and potential future investors) start now. If you’re not sure how, read Alex Iskold’s “How and why to send investor update emails”.
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