Keep in Touch: Engaging Your Investors in Your Company’s Story

The end of July is approaching. It is time to connect with my key investor-stakeholders on our company’s progress. This practice of routinely telling our company’s latest story is an essential component in maintaining my investors’ support.

The Case for Communicating with Investors

It always surprises me when I hear frustrated comments from angel investors lamenting that they made an investment in a startup and only heard again from the company when they needed more funding. This practice is not the way to build strong investor relationships.

If you want to have your investors’ support on an ongoing basis, keeping your investors engaged in your company’s evolving story is essential.  The strength of those relationships will prove critical both when you are raising funding – and when you are running into company-killing problems.

By keeping your investors informed about both the challenges and opportunities your company is engaging, you enable your investors to understand what is happening and feel a part of each step along the journey. My experience is that, by maintaining regular investor communications, my investors are prepared to invest more when I am ready to raise another round as well as be supportive if things go downhill. For example, by keeping my investors informed about the challenges as they emerged over the course of a year, by the time we had to confront the difficult decision to shut down one of my startups, no one was surprised. While it was not a good ROI for my investors, they remained supportive through the closing process. I believe this was because we kept them informed every step of the way, and they knew that we had tried every possible avenue to solve the problems even though we were ultimately unsuccessful.

When prioritizing the time to write an investor report, it helps to remember that your early-stage investors took a risk when they invested in your company. They invested because they believed in the vision that you shared when they made their investment, and they were excited to be a part of realizing that vision.  Now the onus is on you, as CEO, to continue to cultivate those investor relationships.

Tips on Writing Effective Investor Reports

Establishing a regular rhythm of direct, concise, and informative written investor reports is an efficient way to cultivate investor relationships. Here are some of my lessons learned on effectively telling your company’s evolving story:

1. Be regular, reliable, and predictable to build a trustworthy cadence. For example, my practice is to provide a written investor update every quarter, precisely 30 days past the end of the quarter. By consistently following this rhythm, my stakeholders gain an impression of consistent follow-through.
   
   
2. Tell your company’s story at a level of detail that is interesting to your audience.  I typically look to highlight only three to five key points about the company’s progress in two or three written pages in each report. My summary financials are added at the end.
   
   
3. Provide a balanced perspective.  Investors are interested in both the things that are going well and challenges that are emerging, so strike a balance to increase your credibility.  Your investors are smart enough to know that it is rare for everything to be perfectly wonderful in a startup. Before I send out an investor report, I step back and check whether the balance of the points I have shared reflects my overall assessment of the startup’s status.  Is our situation predominantly rosy? Difficult? A mixed bag? Does my investor report fairly represent that balance?  If not, I continue to revise the story to make sure that the overall impression is in alignment with the startup’s reality.
   
   
4. Be disciplined about the time frame your report covers.  Since I always issue my report 30 days after the end of the quarter, more things will always have happened since the report date.  Two reasons I give myself 30 days is to ensure that (a) we have clear information about what the state-of-the-startup is rather than sharing “fresh, hot data” and (b) I have time to do a good job completing the report while not creating resource contention with other tactical priorities.  If I have a few weeks, then I will be able to find a few hours to complete the report.  However, even with that extra time, I make sure that I write the report as of the data that I am issuing it. Put this into practice by asking yourself if the point you are making was true as of your report date. 
   
   
5. Respect your audience, while being mindful of varying levels of technical knowledge. Be cognizant that your investors are smart, knowledgeable, experienced people while simultaneously not assuming they know the details of your business and its technology. For example, when I provide an update on a technical topic, I am mindful of providing enough context so that my reader does not need to know the day-to-day details of my business to understand what is happening and why it is significant. Also, I explicitly label whether the information I am sharing is either good news or bad news since that is not always obvious to a reader who is less experienced in a particular technical discipline.

While these tips are especially relevant if you raised money from many angel investors, I also find the underlying principles important in keeping my venture capital investors informed. For my venture capital investors, the difference is that I issue monthly financial reports since the fewer VC investors are often getting their information on the company’s trajectory from Board meetings.  Keep in touch!