The advent of the internet has moved the power of PR from the hands of companies into the hands of any man who has internet access and an opinion. 140 Twitter characters can be a death knell for any brand new or old.
The obvious next question is… what do you do if your brand is pummeled online and you need to raise a new round to turn things around?
In a world where the new age angel investors don’t adhere to strong due diligence processes or utilize the “spray and pray” method for angel investing success, startup founders can abstain from revealing the bashing they have received online. Chances are that they may even succeed in hoodwinking the ignorant investor or investor group.
However, this strategy will backfire spectacularly if one of those investors happens to take their due diligence seriously. When an investor crashes from the dopamine high administered by the founder to the reality of the harsh reviews online, the after effects can be devastating.
First the investor will go through shock, then disbelief. And when all the reviews aggregated from Twitter, Amazon, Google, Facebook and even LinkedIn confirm their worst suspicions, an angry and virulent email with screenshots goes out to the rest of the investors in the round, ending with the 2 fatal words – I’m out!
It is infinitely better for the founder to reveal the negative press/reviews about the company, and discuss where and how the founders fell short. A discussion on the lessons learnt and the processes put in place to rectify the mistakes will not only educate the incoming investor of the issues, but also create trust between the founder and the investor because the investor can become aware of the issues that led to the negative press.
If the investor feels that he doesn’t know the issues either because the founder hid it from them or didn’t realize it was there for all to see, how will the investor trust the founder to fix something he isn’t aware of?
As a founder, one may lose a few investors who do not want to take the risk of a turnaround. But you will always have investors like Artha that will back an open and honest founder that ran into issues, learnt from it and is raring to go again.