[See you in seconds] How can entrepreneurs avoid conflicts with investors?

The trust between investors and entrepreneurs, as well as the good cooperative relationship established by both parties, are the key to the entrepreneurial performance of enterprises.

The egoistic behavior of investors and entrepreneurs themselves largely determines that conflicts will occur from the initial contact between the two sides to the final withdrawal of investment.

With the difference in strategy and goal between them, the conflict between investors and entrepreneurs will generally appear in the inconsistency between the fundamental interests before investment and the decision-making management after investment.

Why is there a conflict?

Everything, as long as there is multi-party cooperation, will conflict because of the different strategic goals of all parties, thus reducing the efficiency of cooperation to a certain extent.

The field of entrepreneurship is always full of high uncertainty.

Start-ups often face many unpredictable difficulties and risks, so it is easy for entrepreneurs to have different views and ideas from investors in the process of financing. When the perception is inconsistent, the possibility of inducing conflict will increase.

For investors, it may be difficult or even impossible to get all the real information of the enterprise before they set foot in a startup company. Even after the investment, investors will not personally participate in the daily operation of the enterprise.

In the case of asymmetric information, a series of measures taken by investors to reduce investment risks and control investment enterprises, including subsequent decision-making participation and intervention activities, will inevitably conflict when these are different from entrepreneurs' goals and behaviors.

In the early days of starting a business, investors and entrepreneurs pay different attention to the problems.

In the initial stage, in view of their own investment benefits have not been reflected, investors focus on the use of investment funds. At this stage, entrepreneurs are often concerned about whether to invest their money where the enterprise needs it most, and whether there are problems that are contrary to the spirit of hard work and careful calculation in the early stage of entrepreneurship.

In the early stage of starting a business, cognitive differences may be the direct cause of conflicts between investors and entrepreneurs.

Investors' lack of understanding of enterprise development leads to their failure to play a good role in supervising and guiding enterprise development; Entrepreneurs don't know enough about their own enterprises in the early stage, so they lack reasonable planning in the allocation and use of resources. This improves the potential conflict coefficient in the cooperative relationship between the two parties.

It can be seen that the inconsistency between strategy and goal, the asymmetry of information and the difference of initial cognition are all the reasons for the conflict between investors and entrepreneurs in the process of cooperation.

In fact, once entrepreneurs embark on the road of financing, it is bound to be a road of no return. Whether he is a road or a thief boat, continuous follow-up financing until IPO is theoretically the best exit path for investors and entrepreneurs. Think carefully, hard-working entrepreneurs, investors have given so little money in recent years, and how dare they give themselves a high salary? Who didn't drink boiled water and eat steamed bread a few years ago? Most investors' money is used for company development and solving the daily living expenses of entrepreneurs, not for the entrepreneurial team to enjoy.

Therefore, for entrepreneurs, unless the company pays dividends or continues to raise funds, with the improvement of valuation, personal wealth will also increase, then the shares will become more and more valuable, and the salary will become higher and higher until the salary of listed founders is the market average or even higher salary of professional managers. At this time, in life, the salary alone is rich enough, but your shares can make you richer.

Of course, early investors can also get a return by withdrawing early, but entrepreneurs generally can't (restrict the right to sell). Investors are all preferred shares and common shares, and it's their turn to return. So, if there is no follow-up financing, how can the previous angel wheel and early investors withdraw from some of them? How to continue to cycle the entire investment industry chain? For the later investors, in order to get a return as soon as possible, you will also go to IPO as soon as possible. This chain is doomed from the beginning of financing.

What types of conflicts are there?

For entrepreneurs, it is not enough to know the reasons behind the conflict. You should also clearly grasp the types of conflicts between yourself and investors in order to find better solutions to alleviate conflicts.

Generally speaking, conflicts between investors and entrepreneurs can be divided into internal conflicts and real conflicts.

Inherent conflicts, as the name implies, have existed from the beginning. Because investors and entrepreneurs belong to two different groups, one provides funds and expects returns, and the other uses funds to develop their careers. The identity of both parties determines that their cognition of the startup company and their understanding of the goal of the startup company are inconsistent, which determines that whether investors and entrepreneurs admit it or not, the conflict always stems from the cooperative relationship between the two parties.

Actual conflict refers to the conflict between investors and entrepreneurs in the operation of a startup company, including task conflict and emotional conflict. Task conflict means that the two sides hold different views on the specific tasks of the company; Emotional conflict is a kind of relationship conflict. When the interpersonal relationship between investors and entrepreneurs is not harmonious, there will be tension, anger, jealousy and frustration.

Clear water means no fish. In a startup company, if there is no actual conflict between investors and entrepreneurs, and they avoid or refuse to admit that there is internal conflict, then the startup company must have no innovation ability and vitality.

Of course, if the internal conflict does not worsen, it is harmless in itself, but with the passage of external conditions and time, including the continuous development and growth of enterprises, this originally harmless internal conflict may develop into an actual conflict.

This kind of actual conflict will appear in the cooperative relationship between investors and entrepreneurs in different forms, and the most common ones are task conflict, relationship conflict and process conflict.

When investors and entrepreneurs hold different views on a special task, task conflict will appear; When two people have negative emotions such as tension or depression due to uncoordinated interpersonal relationships, relationship conflicts will occur; In the process of enterprise development, when investors and entrepreneurs have different views on the process of completing projects and achieving goals, process conflicts will occur.

How to effectively avoid conflicts

As we mentioned at the beginning, for entrepreneurs, maintaining a good cooperative relationship with investors is sometimes even more important than capital. Then, how should entrepreneurs avoid more actual conflicts when the inherent conflicts already exist?

Entrepreneurs should be able to balance the information asymmetry between themselves and investors.

In the case of ensuring that they have control over the enterprise, entrepreneurs should share the relevant information of the enterprise with investors as much as possible. When entrepreneurs show their trust in investors in this way, investors will feel more at ease with their new ventures and founders, thus relatively reducing some business management interventions.

To some extent, this will dilute the internal conflict in the cooperative relationship between the two.

Entrepreneurs should try to narrow the cognitive differences between themselves and investors.

In the early stage of the development of new ventures, entrepreneurs should always let investors know where their funds are going. Entrepreneurs should not only pay attention to whether they "use their investment funds to the cutting edge", but also understand investors' ideas and their most concerned issues.

If we can reach an agreement on cognition, entrepreneurs and investors will easily resonate with the development strategy and goals of the enterprise.

To a great extent, this has prevented internal conflicts from turning into actual conflicts and appearing in various forms in the cooperation process between investors and entrepreneurs.

Conflicts are inevitable when dealing with investors. Predicting the causes of conflicts in advance and what forms they will appear in the process of starting a business are issues that every entrepreneur should pay attention to.

Only in this way can entrepreneurs deal with various conflicts flexibly and solve them easily. Every startup is different. You may not encounter a letv-style break, nor may you have an Apple-style bright future. However, knowing the conflict between investors and entrepreneurs, we will no longer be deceived by the relationship of "Xu Xiaoming-Jumeiyoupin", and there may be fewer bumps and detours on the road of starting a business and investing.