While sharing financials may seem daunting, it is an instrumental step that shows your confidence and credibility, new breeds trust and alignment with your investor.
Here are five compelling reasons why founders should embrace transparency and share their financials with their investors.
- Build Trust and Credibility: Sharing financials demonstrates transparency, establishing trust between founders and investors and instilling confidence in the founder's ability to manage the company's finances effectively. There is nothing to hide and you are extremely confident with what you have to present.
- Leveraging Investor Expertise in Key Decisions: Sharing financials with investors creates an opportunity for collaboration in key decision-making processes. Investors, who often have a wealth of experience, can provide valuable input and insights when it comes to financial strategies, growth plans, and market opportunities. Their involvement can lead to better-informed decisions and help you navigate critical milestones more effectively.
- Foster Long-Term Investor Relationships: Sharing financials fosters stronger relationships with investors, making it more likely for them to continue supporting the founder's vision. It sets the stage for smoother future funding rounds and increases the likelihood of securing additional capital as the company expands.
- Minimize Potential Conflict Openly sharing financials mitigates potential conflicts and disputes with investors. Clear communication and a shared understanding of financial performance reduce the risk of misunderstandings, enabling founders to focus on growing the business instead of resolving conflicts.
- Enhancing Decision-Making and Strategic Planning: Transparent financial reporting equips founders with better decision-making tools. It enables them to make informed choices, align their strategies with investor expectations, and optimize their business plans based on financial insights and analysis.
Aside from these motivators, it’s often legally outlined in your investor agreement. Contact our team if you ever feel uncomfortable with the information your being asked to share.