Communication with investors, when? how? why?
You worked harder than ever before and you made some initial traction. You are doing great and you received your first investment. You couldn’t be more proud and we congratulate you! You completed the first step in creating a successful company. Now, there is a new sheriff in town. It is not only you and your co-founder anymore. There are some external, experienced people you need to communicate to. You have never had investors before, you have no idea what they expect from you. Well, we have spoken with hundreds of investors and have a very good understanding of their mindset and ways of working. Here are some very simple tips for you on how to communicate well with investors.
First of all, investors are looking for dependable, organized and transparent founders. They need to trust you. In order to get their trust, you need to communicate well with them. Will you trust a person you never heard from and serves you some utopian roadmap with a hockey stick growth prediction, most likely not. When it comes to investor communication, think of the Three C’s; you have to be clear, concise and consistent in everything you say. Let’s break them down.
Communicate your first investor report in a few easy steps using the Rundit tool.
Clear: Your Startup isn’t doing great? Pickup the phone and let your investor know sooner rather than later. They are there to help at such a moment, in fact they are more inclined to help when issues arise because this is where their true value kicks in. Don’t bullshit if you are looking for them to re-invest, give your status update in a clear message. They don’t appreciate surprises (at least the negative type ones). Remember that you are talking with a financial mindset. (Not the most fun people in parties), they don’t feel comfortable in unpredictable situations. Even when you are nailing your KPI’s, drop a message to share your success.
Concise: Investors don’t need eight page update reports, you aren’t the only startup they are invested in. They most often give you the topics (and tools but that’s another blog post) on what you have to provide for them. Be concise, you work in the fast paced startup world, so your communication has to adapt to that style as well. Learn to say lots in a few words, also if you keep in frequent (and honest) contact with your investor they already have a good idea what to expect from you.
Consistent: This one should be very straight forward. Consistently be in contact with your investor. If they tell you to reach out to them bi-weekly with updates, then reach out to them bi-weekly with updates! When reporting if they ask for your burn rate give them the burn rate and not something else because those numbers happen to look better. Of course you can include additional updates and polish up the numbers but don’t waste anyone’s time. Simply be consistent with your updates in terms of time, message and language.
Establishing a foundation for effective communication for your startup is crucial, communicating the effects of your work should be aligned with the company culture. Good investor relations are the key to future funding and developing good investor relations is attained through effective communication. One investor once told me ‘’the more frequent and transparent the communication is, the more likely an investor will see challenges ahead of time before they become disasters’’. In most cases effective communication will make you dependable, organized and transparent in the eyes of the investor. See what I did there, that’s right I reverted back to the beginning and now we have gone a full circle.
Founder, are you look for an organized way to report? Use Rundit and begin your communication today.
Be clear, concise and consistent when talking with your investors.
It is easier to communicate bad news (and to handle it) when you communicate frequently.
Rundit best practices:
Short message bi-weekly on key issues and news. You did something great, brag!
Metrics update once a month
Textual update monthly or quarterly