Investor’s Proposed Action when Startup Stalls

If the startup’s team is ignoring your communication or not valuing your input as an investor, it’s essential to address the situation strategically. You want to ensure your investment is protected while maintaining professionalism and avoiding unnecessary conflict. Here’s how to proceed:

Assess the Reason for the Silence

Are they overwhelmed with operational tasks?
Do they see you as too hands-on?
Is there a leadership gap within the startup?
Are there deeper financial or internal struggles they don’t want to discuss?
Understanding their reasons can shape your approach.

Adjust Your Communication Approach

Change the Medium – If emails or messages are being ignored, try setting up in-person meetings or requesting a formal investor update call.
Refocus the Message – Instead of emphasizing authority, frame your concerns around collaboration and shared success.
Leverage Other Investors – If you’re part of a group of investors, coordinate efforts to demand transparency collectively.

Reassert Your Role

Remind them of the investment terms and expectations.
Highlight your value beyond just funding—whether in networking, strategy, or industry expertise.
Set clear boundaries and consequences if communication continues to be ignored.

Demand Accountability
If informal communication is consistently ignored:

Call for a Formal Review – Request financial reports, business updates, and progress metrics.
Invoke Any Legal or Contractual Rights – If your investment agreement includes reporting requirements or decision-making rights, remind them of these obligations.
Consider Board Involvement – If you hold a board seat or have influence within the startup’s governance, use that position to enforce transparency.

Consider an Exit Strategy
If lack of communication signals deeper problems and leadership unwillingness, consider:

Negotiating a buyout of your stake.
Exploring ways to sell your investment to other stakeholders.
If necessary, seeking legal guidance regarding your rights.

If leadership is unwilling to engage, it may indicate serious operational flaws that affect the startup’s potential for success. Taking proactive steps now can protect both your investment and your professional reputation.

Read more:

Cumming, D., & Hornuf, L. (2018). The Economics of Crowdfunding Startups, Portals and Investor Behavior. Cham: Springer International Publishing :.
Grebey, J. F. (2011). Operations due diligence: an M&A guide for investors and business (1st edition ed.). New York, New York State: McGraw-Hill Education.
Greene, J. R., Krouskos, S., Hood, J. A., Basnayake, H., & Casey, W. M. (2018). The stress test every business needs : a capital agenda for confidently facing digital disruption, difficult investors, recessions and geopolitical threats (First edition. ed.). Hoboken, New Jersey: Wiley.
Greiner, S. P. (2013). Investment Risk and Uncertainty: Advanced Risk Awareness Techniques for the Intelligent Investor: Wiley.
Martin, R., Casson, P. D., & Nisar, T. M. (2007). Investor Engagement: Investors and Management Practice under Shareholder Value (1 ed.). Oxford: Oxford University Press.
Schmidlin, N. (2014). Art of Company Valuation and Financial Statement Analysis: A Value Investor’s Guide with Real-Life Case Studies. Somerset, NJ, USA: Wiley.
Singh Bachher, J., Dixon, A. D., & Monk, A. H. B. (2016). The New Frontier Investors : How Pension Funds, Sovereign Funds, and Endowments are Changing the Business of Investment Management and Long-Term Investing (1st 2016. ed.). London: Palgrave Macmillan UK.

Written by Swedish Ventures, Rolf Olsson. Remarks to this article could be sent to glossary@swedishventures.se.

ASO: DD-13-20