Investors are the people who are helping you run your business financially and also giving their expertise to help. So, it is very important to communicate properly with your investors. It’s also necessary to know how often you should communicate with your investors, how you should do it, and which method can help you create a strong connection with the investors while keeping your business at the forefront of their minds.
According to a Survey Done by NFX on nearly 870+ founders, 60% of them communicate and send updates to their founders every month, and only 16% of founders communicate with the founders quarterly. In this blog, we are going to dive deep into the details and help you with your communication guidelines.
A very important question among newly founding Start-up founders is: How often should you update your investors? You should be careful about it. After all, you cannot just do regular chats and update your founders because all of these are very time-consuming and sensitive matters to handle. There are two reasons. First, as the investors have funded your business, they want to see the progress, so if you delay or don't update them on your progress, It will be super difficult for you to get help in the next phases. Secondly, You need to stay on top of your founder's mind; this will help your founders to be more connected with your business, resulting in future assistance.
Communication is super helpful in almost every aspect of your life. This is no exception. Regularly updating your investors comes with some pros and cons.
The most important reason why you should keep updating your investors is— transparency. If you keep your investors and shareholders updated, it will show you and your team are accountable and dedicated to the business. Investors always want to see a good spirit in the team. This makes them more confident in investing in the business further. Giving updates also keep everything transparent to investors and shareholders, which is very important in business.
If you are a founding member of the start-up, chances are you are 100% invested in your company, both physically and mentally. Although investors and stakeholders are very important parts of the company, your company is not the only venture they invested in. Generally, angel investors and VCs Invest in multiple companies at the same time. So, if you don't follow up with them regularly, it will be tough for your company to stay on top of their mind. Staying on top of their mind will help you get important expertise from the investors.
You may ask, do investors ask you for monthly or quarterly updates? The answer varies from person to person. It may also depend on the industry in the market you are working on. But we would suggest you be proactive. Instead of waiting for your investor to tell you, You ask them how they would like to be updated.
You should try making every update count. Instead of sending them just the relevant data, ask for their suggestions or recommendations and try your best to apply them. This will also ensure that their voice is being heard.
This is the main question. It depends on various aspects and phases of your business. But no matter what the time bracket is, you need to be regular and consistent about it.
The “More the better” rule may apply to your business if you're just starting off. Because when you start off, there are so many obstacles you have to face, getting suggestions or recommendations from your investors will really help in this phase. Alongside those tackles, you also see a significant growth jump when starting off.
The update frequency may change as the business grows. Once you start hiring people or you’re planning to launch a product, instead of giving frequent updates, choose to send monthly updates. Alongside the updates, share your future plans, target customer data, and relevant information.
Although we mentioned that the update frequency changes with business growth if your business's market is risky or you are operating in a highly regulated industry, consider providing more frequent updates to investors, especially if your business is high-risk. Chances are the stakes are also high. So, your investors will naturally expect you to update them on a regular basis and more frequently so they can know what is going on and how you are operating your business. This will help you to be more transparent, Responsible, and trustworthy.
The investors may not be completely associated with your company, but it's essential to remember that investors are your top priority. They have invested not only their money in your business but also their trust. So upon receiving investment, talk clearly about how they want you to communicate and what their references are. Always discuss choices and preferences with them and make decisions accordingly.
Decide how you want to Communicate with investors. Don't just send Them e-mails. Occasionally, try to join them in Zoom calls. Meet them in person if possible. This helps you to be a better communicator and gives you important exposure.
As you work on The investor updates, try creating a company template and then use it for future updates. This will help investors understand the image and essence of your brand. As we have been telling you— no matter how frequently you update your investors, it needs to be regular. So, Schedule a regular reminder and follow them up regularly. Founders are the one who is in touch with the investors on a regular basis. As a founder, you have a lot of work to do. So, if your start-up has more than one founder, assign someone to communicate with the investors regularly. That way, your company can avoid mistakes, like worrying about if the update has been sent or not, who will prepare it or send it, etc. Also, don't be shy to use visually appealing templates. Make sure they are attractive and easy to read.
Use important financial metrics like revenue, burn rate, profit, etc. to demonstrate the current state of your business. These are important numbers that give a quick overview of your financial performance and sustainability. The Metrics not only show financial know-how but also help in decision-making for the business's further growth.
You may Want to finish off your update with a call to action. Like in the e-mail, ask your investor about how certain products can be improvised. Ask them if they have any suggestions. Ending your update with a CTA will not only help you get your investors' suggestions and recommendations but also engage them regularly with companies, progress, and growth.
The key purpose of updating your investors is to give them an overview of how your business is going while also not sharing each and every detail of your progress. Regularly communicating with your investors helps you and your business to stay on top of their minds and also helps you in getting funding and other assistance for the next round. So, investor communication is really crucial if you are aiming for your venture. Remember, Investor communication can be fruitful When mastered perfectly. Best of luck with updating your investors.
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