Keep Investors Updated
Today I have a simple piece of advice for founders — keep investors updated on your progress. This applies to your existing investors and to potential future investors. This easy tactic will help your business in several ways. Current and future investors will feel more buy-in to your company and will be better positioned to assist you in the future.
Across the startups I have invested in, I have seen a wide range of communication frequency from the founders. Some are sending regular monthly or quarterly updates with tons of info. Others I have to bug a few times each year just to get anything from them. If you have taken money from people, you have an obligation to inform them regularly how things are going. I understand that you may be jammed for time, just make it a quick email with a couple of key bullet points on the business. If you have a big list of investors, you don’t need to include financial data or other proprietary info. It’s OK to keep it high level but get something out regularly.
And make sure to include an “ask” when you communicate with your investors. Maybe you want them to introduce you to potential customers or new investors. Maybe you want them to get the word out about a new product launch. Maybe you could use some help with a hire. Your existing investors are incentivized to help your company, ask them to do something.
Communication with prospective investors is really important as well. I’ve spoken with hundreds of startup founders in the last year, and I would estimate that less than 20% regularly update me about their progress. Most of the time when we pass on a deal, I explicitly tell the founder what they need to do on traction to get us interested. Maybe founders are waiting to hit those hurdles before reaching out, but I don’t like that approach.
The smart ones ask me if they can add me to their email distribution list, and I get a chance to monitor their business. I tend to find that startups who have completed accelerator programs are the best at this, I think programs like TechStars and 500 Startups hammer home this point with founders. Also, I am completely comfortable with a founder including an “ask” of prospective investors in these update emails. I am less likely to step up for a company I haven’t invested in, but it can’t hurt to ask.
Thanks for reading today’s post, hopefully this helps you plan for effective investor communication.