Editors Note: The following guest post was contributed by Genesis Partners partner Eden Shochat. It originally appeared on The Junction blog. Reach out at @eden.

Taking an investment is getting into a long-term committed relationship, which like any other relationship needs to be cultivated, nurtured and managed. Funny enough, many of the entrepreneurs I meet have this perception of investors coming in and taking over their companies, with the founders losing control through the investors getting veto rights. The reality of it is that the company founders and management are much more informed about the day-to-day and are so much in control, that there is a whole area of studies around the “Principle-Agent Problem”.

One key point even before managing your investors is selecting them. I particularly like this list as a sanity check for an entrepreneur talking to a VC. Much like any relationship, you need two to tango, and startup life is hard enough without being stuck with, well, an asshole investor.

I am writing this more of a sanity check for me and as a note to companies that I work with. Hope someone else finds it useful, but YMMV.

Many of the following “how not to” indicators should be warning signs for early stage startups. Not “run to the hills” signs, but definitely pointers that something is wrong with the relationship:

• Demand for constant updates: A typical scenario is getting a call from your investor complaining that they are out of the loop and feel that once you got their money, you don’t call or write. Generally, this is exactly the investor that doesn’t provide you with enough value that you feel you should keep him up to date.
• Waiting for board meetings to “discuss” status: This is the other extreme, where either because of lack of capacity or desire, they don’t keep an on-going communication channel with you. The risk here is twofold: they are likely to be surprised with the board presentation, or worse off, will be less dependable to help the company when things go out of whack. And they will, they always do.
• Too active of an investor: You know how is it like. Your investor made an introduction for some reason, and now the overhead is on you. Or, crisis mode introduction to a VP of Marketing of whateveryoucallit.com because there was a slide about viral distribution in the last board slide deck. In hebrew we call it “full gas in neutral”, I wonder what’s the english comparable.
• Raising hell the first time you don’t meet predictions: Shit will hit the fan, be at at the first board meeting when the investor becomes an insider and starts grasping the nitty gritty of the business, the second board where it became apparent that shorting on your Q results predictions would be a sound investment strategy or if you just don’t get along well.

The reality is that an investor has one primary “stick”, which is replacing the CEO. When the CEO is the founder, who is (at least in my mind) the heart and soul of the company, this can be disastrous.

You need to realize the basic issue is information asymmetry. It’s not (I hope) that your investor is looking to nag, be shallow, take over your precious time or harm the company, many times it’s them feeling out of control and not having access all the information. The easiest way out of this is keeping a proactive communication channel with them, and defining very clearly what is expected of you and them. Notice yet another similarity to marriage?

So, how could you empower your investor to be more helpful, or in other words, how I would like to be managed by you:

• Expose KPIs (all the time!): The hardest part about exposing KPIs is defining them. What are the key performance indicators you’d like to judge where you company is at? An example for a consumer product could be: # of users that joined last week, % retention, average acquisition costs and average life-time value per user. For an enterprise sales company it would be average deal value, duration of POC, % of close. Email these in a tabular format that includes past weeks results, say what are your thoughts about the change and whether you are changing anything as a result. Be transparent.
• Tell them what you need (and what you don’t): I ask companies for my top-3 goals for that company every month. What should I be working on? Hiring, Intellectual Property, Monetization? This way I know what’s expected of me and you know that I won’t bombard you with things you don’t need. Understand your investors deeply. Do your homework so when you need something you know which ones to go to when you need something done for you. Don’t blast out emails to everyone you’ll end up the spammy entrepreneur and people will start to ignore you.
• Don’t wait for board meetings to meet and consult: Doing the day-to-day execution is demanding, but find the 10-15 minutes to call, ask what’s up, tell them the latest good & bad. You’d be surprised, sometimes just a good sounding board can make all the difference in that lonely life called being a CEO.
• Forward focus: When in board meetings, don’t spend more than 20% of the time reviewing the past. The rest should be devoted to how (if required) you are going to change what needs to be changed and what goals do you want to achieve moving forward. Plan your execution and execute your plan. Many founders do the opposite split in feeling they need to “present” to their board.
• Be direct, don’t be optimistic, or “manage expectations”. Tell it like it is. Treat it as a partnership, exposing good & bad so you can both put your thinking cap on and work through issues. The worst thing that can happen is having a positive outlook (remember, this is what they updated their partners with!) while issues start cropping, only to realize you are running out of cash in a couple of weeks (true story).  Ben Horowitz had a great post about this: CEOs Should Tell It Like It Is

Taking an investment is getting into a long-term committed relationship. Most important point is that it’s ok to ask for help – no one does it alone. Always make sure one of your investors is a person who you can call at 3am if you just need someone to chat when you’re at your lowest. startups are hard! You can’t always be friends with them, but it’s a long ride, might as well do it with someone you like.

The following guest post was contributed by entrepreneur-turned-VC Eden Shochat. It originally appeared in the discussion board of the Dec 22nd TechAviv IL meetup.

The we-do-2-seed-investments-alone-a-year-because-we-need-to-support-them model doesn’t work.

There, I said it. I’m a recent recruit to the VC world, most recently co-founder of Aternity (user experience monitoring) and face.com (massive face recognition platform). Being at the most recent TechAviv meetup, at some points I found myself glad not to be on the panel of VCs, and others where I felt I wanted to shout.

In my mind, seed investing is very different than round-A, B, C and beyond. It’s much more of a numbers and sweat game. The amount of support required is higher than subsequent rounds and too many companies fail at that stage; actually, one should assume more than 2/3 of the companies won’t raise an A round. So, the net effect is that if you only plan to do 2 seed deals per year, the odds are you will fail that year, reducing your incentive to make more seed investments the next year. It’s a catch-22.

When you are the founder of a seed stage company, there are three major issues you care about:

1. Product/Market fit discovery: You must find what’s the minimum viable product that serves your customer. Your customers need to be joyous. You need to delight them. We don’t have enough product talent in Israel – anyone that is involved with the company must be able to help, and not with pattern-based advice. Mockups, brainstorms, pushbacks, the works.

2. Hiring the right team: Roi will need to excuse me, but we do have hackers in Israel. We actually have quite a lot of them, but Yaron is also totally right – most of them want to start their own thing. Most seed stage startups need help to find teams that worked well together before, and in making these teams comfortable they should be working with them on this next big thing.

3. As little money-raising overhead as possible: It’s the time for you to be iterating on your product, to get customers to use it and find what works best. At this stage, there isn’t much due diligence to do: it boils down to team, scale of target market and competitive situation. Also, negotiating what will be the rights of preferred shares isn’t really what you should be doing.

The issues/risk/work (whatever you want to call it) don’t end there. Once you finally have a product with traction, most Israeli companies lack the network in silicon valley to promote it and make it front and center. It’s not a press thing, it’s a group of people who are extremely welcoming… if they know you.

The flipside is that one cannot escape that the burden of proof on a first timer is on the entrepreneur. More so, second timers will already know that they can get to traction pretty quickly. When you look at valley deal flow, you see that companies raising their first round of financing are already making money. It’s a small amount, it’s usually not repeatable, they still haven’t proven scale, but they are out there in the market.

Yes, costs are lower. There is the cloud and open source software that make capex and engineering expenses to a level where a 3 person team can create a real product. Yes, a major part of being an entrepreneur is the ability to convince your team (and many times their significant other) that the equity you are getting is worth fighting for in the day-to-day life, but my primary feedback to you is: “build a smaller product”. Understand where you want to get to, but go for product/market fit that is less certain and pivot from there. Really figure out what is it that would drive people to talk about you, come back and refer others. Yes, it’s risky. Yes, there will be competition – but at least you will have customers to compete on.

With all these hurdles, it manifests itself with an entrepreneur vs. VCs session at TechAviv. It’s startups from mars and VCs from venus.

So, what am I offering? Syndicate early stage deals. Collaborating with US-based angels on companies that are committed to developing killer products. Any.DO was raised in the meetup (thanks Ishay – I was the one clapping vigorously), and it’s a great blueprint of an early stage investment – awesome first time founders that bootstapped their company into 350,000 installs. I am proud to be part of that company, and for Genesis to have led the financing round.

There is a huge opportunity around consumer focused companies in Israel, be it mobile or Internet. Would love to work together to make it happen.

You can always reach me at eden@genesispartners.com.

Guest post by TechAviv.com contributor Lisa Damast of Israel Innovation 2.0.

Nine months ago there was talk and speculation that Israel’s Web sector was done and not likely to recover. Mainly expressed by TechCrunch editor-at-large Sarah Lacy after her visit to Israel in March, at the time she wrote about her disappointment with Israeli Web startups except for MyHeritage and a few others. Her piece caused an uproar among Israelis on Twitter and in the blogosphere, including on TechAviv.

At the time Lacy wasn’t completely off. It had been a while since an Israeli Web startup had a big exit or received a large investment or a lot of media attention. Combining this with the poor economy and the rise of Israel’s cleantech sector (which continues to grow), it seemed that Israeli innovation in the Web space had peaked when Shopping.com was purchased by eBay in 2005.

By September of this year though it became clear that 2009 was actually the resurrection of Israel’s Web industry and that Israeli entrepreneurs did not lose their mojo as Lacy had suggested they did. At TechCrunch50 in San Francisco Israeli startups received the three top prizes for their promising technologies: Trollim, Red Beacon and AnyClip. A few weeks later in October, it was revealed that Answers.com, perhaps the most memorable Israeli site to have survived the dot.com bust and to thrive, was the 13th most visited Website in September.

In addition to these sites, the second half of 2009 saw the rise of another part of Israel’s Web industry, Facebook and mobile applications. In November the Facebook facial-recognition application Face.com went live and in December the community-generated traffic tracking mobile application Waze started to make headway in the U.S. market, among other regions.

While most of these companies still need to prove themselves (with growth, revenue and exits…) it is clear that there is a new drive among Israeli Web entrepreneurs and Israel’s Web industry is reemerging. 2010 will be an interesting year to see what happens to these startups and if the newfound mojo will reverse the investment decline of recent years in the sector.

This week Twitter released their much anticipated Lists feature which basically lets users create aggregated feeds of related twitter accounts they want to follow and share.

We’ve created our own lists and we’re inviting all tweet’n Israeli startups, founders, VCs, Angels and tech bloggers/press to get on. And if you or your business is not on twitter yet, you’re outside the conversation. You’re missing it and we’re missing you. Business is about relationships. B2C, B2B, B2Whatever. You either engage, listen and learn, or you don’t. Yalla, let’s tweet.

Submit your twitter feed here to get on one of the lists:

• Israeli Startups
• Israeli Startup Founders,
• Israeli VCs
• Israeli Angels
• Israeli Startup News (Bloggers/Press)

The following is a guest post by @JohnLoGioco.

The recent TechAviv meetup at Stanford University sparked a conversation around how to shorten sales cycles.   Shahar Nechmad, founder – CEO of NuConomy put this question to the attendees.  Throughout my career and now over at outbrain, I deal with sales cycle management on a daily basis and would like to offer these observations on how to shorten sales cycles for founders like Shahar.  In NuConomy’s case, as with most startups the goal is to get a smaller company’s “stuff” onto a larger company’s platform.  The “close” is identified as the moment the smaller company’s “stuff” (read code, tags, API calls etc.) actually gets installed on the pages of the larger company’s site.  The mistake most BD and sales people make is to think there is just one sales cycle.  This is simply not true.  Often there are multiple cycles that need to be overcome to win an account and truly shorten the time it takes to get your “stuff” integrated.  For technology sales, even if the product is free as is the case with many tech startups, there are often three distinct sales cycles that need to be identified.

First is the sales cycle of getting buy-in from the senior business officials.  This process involves standard sales practices of setting meetings, giving presentations and creating a sense of urgency to act.  This is usually not where the delays come that cause sales cycles to extend unnecessarily.

The second cycle often comes from selling senior ranking product folks who also need to be convinced to act from a platform perspective.  More and more companies are moving to an internal opt-in basis, as business units inside large companies can make their own choices on what to adopt or not.  That said, senior product folks need to “bless” the idea before individual business units can have the choice to opt in or not.  Working through this sales cycle requires a different set of selling points.  The mistake here is to use the same tactics and collateral with product folks as you might use on the senior business folks.  As a general rule, product folks must look out for the enterprise platform, so by nature they are in a more protective mode.  To answer these concerns, materials and pitches that deal with safety, security and stability will greatly shorten the evaluation period.

Third is the sales cycle of getting the actual programmer or developer to integrate the code on the page.  After senior officials and product leads say ok, the last step often lies with the developer.  Often times this is where startups lose control and watch months pass without getting installed or integrated.  It happens to all of us, without exception.  First, a sales or BD person must treat this sales cycle with the same care and attention as they do with the other constituents.  This is where big mistakes are made.  Sales and BD folks tend to think that once they get to the developer level they have the power to “tell” the developer how it’s going to go.  This is a blunder that can cost you in months, not days from getting installed.  Second, developers do not want to be sold, and the thought of being contacted by a sales or BD person is most often sickening to them.  To avoid this try and find out asap the best way to communicate with the developer who may have your “stuff” on their  todo list.  Often times developers do not want to be called, but rather prefer only email.  If you find this out early, you can shorten the sales cycle without doubt.  Third, when you get emails from developers look at the time stamp on the emails.  Often times you will see email sent at off-hours.  This is a clue as to when is a good time to send an email that will be looked at and maybe replied to immediately.  Often times, a simple reminder or inquiry to the progress of an installation is enough for a developer to squeeze your code into the next item on the todo list.  Lastly, don’t forget who helped you.  Once installed send a personal thank you to the technical team for installing your “stuff.”  Usually there aren’t a lot of thanks going around in the back offices of IT or R&D of a big company, so let them know you appreciate the effort.  It will go a long way when it comes time to expand the installation or get recommended to another business unit.

Although there can be three sales cycles within one deal, a sales or BD person does not have to follow the above order.  In fact, one can shorten a sales cycle drastically by starting the deal with a developer level contact or a product person.  These folks have the power to put a piece of code on a page, and this is the first step in proving your worth.  However, tread carefully as this approach does have its risks as senior business people don’t like to play catch up so keep this in mind.

Any other good suggestions please comment and we can keep this thread alive to identify and publish best practices for shortening sales cycles.

Thanks to Yaron Samid, founder of TechAviv for inviting me as a guest blogger here on the TechAviv site and for hosting another great event.

Feel free to contact me with any questions at john (at) outbrain (dot) com or on Twitter @JohnLoGioco.

I was just searching through our member list for startups that I can follow on Twitter for our new TechAviv Twitter feed. We’re going to follow every Israeli startup we can find on twitter to create a realtime conversation hub for the Israeli tech startup community. To my surprise the vast majority of our members are not on Twitter yet.

GUYS WAKE UP. If you haven’t grabbed your company’s Twitter username yet, someone will be selling it to you tomorrow. Twitter usernames are the new domain names. The land grab is happening while you’re reading this. Go get yours. Even if you’re not going to start tweeting immediately, you should own your company name before someone else does. If there are words that define your space (e.g. “freecalls”), grab those too while you can. Imagine if you snapped up domain names back in 1993. Get it?

Twitter, whether you like it or not, has become the next evolution for communications with your users, customers, partners, investors and even competitors. It doesn’t replace email, IM, blogs, web sites, newsletters, forums, meetups etc., it enhances them and enables you to listen in realtime to what the world thinks of you and your products. Try a twitter search with your company name. Now subscribe to that RSS feed. You’re welcome.

Once you get your Twitter feed going, just start putting out daily information about your progress and follow and reply to users that are asking you about it. If your site or service produces dynamic, timely information or a data stream, look into having that stream post to Twitter automatically via their API. It’s a viral traffic catalyst for your site/service and its free. Companies like Boxee (4,000+ followers) and Bukisa (1,000+ followers) get it and are reaping the rewards. In general it seems like the Israeli startups with US-based CEOs are more up on the game. That’s a whole other post for another time.

Just start guys. If you’re authentic, engaged and provide a compelling service, your twitter feed will mobilize your users to pass on your “inside info” across all of their social graphs. The cascade effect will be enormous. Obama taught us a thing or two about that. I’ll venture a wild guess that our politicians weren’t taking note. You friends, can’t afford not you.

When you start tweeting from your company feed, @TechAviv me and lets get the conversation flowing.