Closing the deal is just the beginning. After funding, the investor needs to keep track of the company’s growth journey. For diligent execution of the strategic plan, an investor needs to know whether its investments are operating at optimal productivity and efficiency and whether all hygiene measures are in place, including corporate governance.
Seasoned investors are aware that the investee companies could lack a mature corporate culture, and asking for information can be perceived as overbearing or even micromanaging. Most startups fear precisely this, and their management teams see external professionals whose duty is to gather information and report, then to treat it as a matter of distrust.
A smart move of many investors: Engaging a third party to work with the management team creates a buffer of trust, which goes a long way in building a healthy relationship between investor and the investee.