Sometimes Tough Love Is The Best Love

Attended a shareholders’ meeting of a portfolio company recently, during which the founder demonstrated a working product that is starting to generate revenue. The investors present were quick to congratulate the team and the founder, which is understandable. What surprised me is that none of the investors were willing to ask hard questions even though the product is late to launch, as a result of which the startup now needs to fund raise sooner than planned.

I am not a confrontational person, and I dislike playing bad cop as much as the next person. But when things are not going to plan, it is the investors’ responsibility to push founders to do things that may be unpalatable to them in the short term (e.g. cutting founders’ salaries) but will ensure the viability of the company in the long term. It is easy to pat founders on the back, but investors are doing both themselves and the entrepreneur a disservice by not asking the tough questions when there is still time to turn things around.

I’ve always been an advocate of investors maintaining a good relationship with founders during good times and bad. Building a startup is tough, and there will inevitably be bumps along the way. From personal experience I know that having investors who remain supportive when it’s tough going is invaluable. I also know that sometimes tough love is the best love.

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