The business world is changing rapidly in 2022. If accelerated globalization and escalating technology weren’t enough, businesses across the board have also had to adapt to the added caveats of an ongoing pandemic and large-scale economic transformations for net-zero emission goals. This has generated some huge shifts in industries on a global scale, and with it, established companies and entrepreneurs alike have had to pivot and innovate.
According to Tech Crunch, however, data collected from a number of sources indicates that 2021 set venture capital (VC) records around the world. From dollars invested to deal volume, sectors, and geographies—all facets of VC investment posted their strongest performance and excelled on essentially every continent, despite rocky economic grounds.
Michael Redd—NBA all-star, Olympic gold medalist, and now angel investor—has made it his post-athlete career mission to find the best ways to stimulate healthy relationships between investors and the business leaders of tomorrow. As co-founder and chairman of 22 Ventures, his angel investment agency looks to enact this mission through a focus of ‘people over profits’. Let’s take a look at what he has found are the most critical things needed for building and bolstering healthy investor relationships in 2022.
Finding The Humanity in Investment
Navigating the tumultuous economic landscape of 2022 requires much more than a business partner, but rather a person that also has the capacity to be a mentor and confidant—making relationship-building all the more critical in the investment world.
“It’s terrifying to be an entrepreneur in the COVID era,” says Michael Redd. “At 22 Ventures, we try to focus more on the person than the product, as we look to invest in the people that grow companies.”
All companies were started by an individual at their genesis. For entrepreneurs, their business is often even more personal—representing an annex of themselves because it is the tangible manifestation of their passions, hopes, and ideas. Investors often choose who they will fund based on those very same human principles, selecting founders that align with their own fundamental beliefs, because let’s not forget, they are human too.
”Investor relationships should be rooted in authenticity and respect,” continues Redd. “And so individuals should prioritize communications at the beginning of any investor relationship and set a level of transparency and clear expectations.”
Creating healthy relationships in business helps to generate a narrative of reciprocity, where both the role of the investor and the entrepreneur can understand each other on a deeper level. This can be done by getting to know each other outside of the professional setting, finding common interests to relate to, and who knows, these common threads could even circle back and help to inform business decisions.
The road to success in business can be long and winding, often with unexpected detours, so be sure that the person you’re walking it with is someone you not only value, but trust.
Embodying a Team Player
Not unlike the game of basketball, learning to be a team player in the business world is also critical. You cannot carry the whole team on your back, try as you might. Even if you did, the outcomes will never be as successful as utilizing all of the players on your team. In fact, 97% of both employees and executives believe a lack of alignment within a team impacts the outcome of a task or project.
“Recognizing the value of the investor beyond their finance, and seeing them as a strategic partner unlocks a lot of doors,” continues Redd. “Outside of the finances, investors should be there to mentor and help network as they have most likely seen what you’re experiencing before—rely on them as part of your team.”
This allows an investor to be more than your financial partner, but also your team coach—passing along the experienced knowledge they have about building teams and giving your vision the best chance at success.
“Having coachability is essential because it shows not only the ability to be humble but also the ability to be a continual learner,” says Redd. “There are a lot of parallels between the sports and business world, as business is truly the sum of its parts. It is important to not only know your personnel, or team, but also understand how they work together—that way you can utilize each individual’s talent to its utmost potential.”
Investment mirrors that of an ecosystem and each individual serves a niche and a vital role. If you have taken the time to find strategic partnerships, have security in those relationships, while also understanding your role in them. Then, there is more trust to ebb and flow with the people on your team if you are ever thrown a curveball.
Know Your Story
While it is important to know your team members’ talents, also remember that you bring your own worth to the table. Entrepreneurs need to not only believe in what they are doing, but be able to make others believe in it as well.
“You can’t be insecure as an entrepreneur,” says Redd. “Investors are looking for passion, hunger, and a belief in yourself despite the setbacks.”
No one knows your story better than you do, so it is critical that entrepreneurs not only know what it is that they want to pitch and why, but also bring the person out of the pitch deck. By simply being themselves, founders can “show rather than tell”, and by doing so show investors they have what it takes to navigate the sometimes harsh business world.
“If you allow yourself to truly shine through, you will organically connect with those that align with your goals,” continues Redd. “This will help you to graduate from purely transactional relationships in investment, helping investors and entrepreneurs alike to focus on healthy relationships that take them much further.”
Although business is radically different than it was only a few years ago, healthy relationships have always been the secret sauce to carry any entrepreneurial pursuit to its furthest heights. This boils down to truly knowing your team, understanding the role of each member, and finally understanding the value that they (and you!) bring. If these core concepts guide you as you seek others to join in on your aspirations, you have the key to unlock business success.
Disclaimer: This article mentions a client of an Espacio portfolio company.