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Do Not Pivot without Telling Your Crowdfund Investors

Pivot is a buzzword these days, sort of like re-engineering and business disruption. If you pivot — if you change the core of your business — you absolutely must share the news with your investors. You definitely don’t want a fundamental shift in your business to be a secret from the people supplying the cash.

Pivoting means changing your direction or tactic in response to changing markets, increasing competition, or any other business reality. Pivoting can be a good strategy if it’s handled well. (Twitter and YouTube both emerged from pivots.)

Investors have jumped onto your ship because they believe in you and like the direction you’re going. They like the vision that you created and want to be a part of it. Pivoting away from that direction or vision without letting your investors know is bad business and leaves them feeling insecure and uncertain about how their money is being used.

However, don’t just assume that you can make a statement to your investors about a pivot and they’ll smile and nod. If you’ve been trying to establish an organic farm, you can’t simply say, “The company will now focus on grain-based, clean-burning fuels instead.”

Your new idea may be the greatest one in the world! It may carry the potential of saving the environment and making huge profits at the same time! You may be hitting yourself in the head for not thinking of it years ago! But no matter how jazzed you are about the new idea, you can’t assume that people will follow you onto a new path with just a quick, one-sentence message.

Instead, if you’re going to pivot, you must socialize the idea first. That’s a fancy way of saying that you need to talk to people about it. Some of those people must be your key investors and supporters. You need to bring them in on the conversation early, let them point out potential flaws or weaknesses in your plans, and ask for their help to conduct research and generate talking points about the new possibility.

What happens if you aren’t upfront with your investors about a pivot? Well, then the buzz about your business is that you just disrupted the process and you’re going to need some serious re-engineering. Not cool. Your relationship with your investors is long-term, and as with all long-term relationships, communication is the key to success.

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