A few weeks ago, we were getting ready to close on an investment. I asked one of my partners when the news of the financing would be announced. He said, “pretty much right away.” And I said, “we had better let our friends who run XYZ company know.” My partner said, “absolutely, can you compose an email we can send together?”
This has been our mantra for a while now. We have a lot of friends in the startup world, entrepreneurs, VCs, management team members, and it is quite often that we are involved in a transaction, a financing, a sale, a merger, that might impact them and their interests. We don’t want them to read about it on TechCrunch. We want them to hear about it from us first.
You’d be surprised how much goodwill this practice creates. Nobody is happy hearing that you just funded a competitor of theirs, or something similar, but when they get an advanced warning from you along with an explanation of your thinking behind the move, it goes a long way. They aren’t caught off guard and they can process the information calmly. It doesn’t mean they will be happy about the news. But it does mean that your relationship with them will be preserved (in most cases).
Doing this is tricky. Investors have an obligation to keep information they have confidential until the subject company decides to disclose/announce. So you have to time the tipoff of your friends carefully. We typically wait until the day of the announcement or at the earliest the evening before. In many cases we will clear the tipoff with the subject company as well. A lot depends on the people and relationships involved on all sides.
Relationships and reputation are the currency of business. I do not believe you can be successful in business without both. So preserving them is critical. And one good way to do that is to make sure good friends don’t hear about things that are important to them on TechCrunch.
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