Two startup founders, Stacey Ferreira and Scott Ferreira from AdMoar, recently asked me what format I thought worked well when it comes to regular communications with investors. That got me thinking. I get a wide variety of update messages in my inbox from startups that I am invested in. And from others where I have talked to the entrepreneurs at some point or otherwise got connected.
I started by noting that a fundamental issue most all startups have is that… no one knows who you are. (Which is why founders who ask for NDAs from angel investors get tagged as rookies — experienced investors know that having your idea stolen is typically the least of your problems. Rather it is getting anyone to pay any attention to it at all!)
If you accept that premise, then it seems obvious to me that a startup should use all of its friends, supporters, advocates, etc., to magnify its voice. That way you can get an assist in solving your “who knows me” problem and specifically can use your growing ecosystem to help drive leads, add credibility, grow visibility, crowd source answers to questions you might have, etc.
The smartest startups I know combine regular investor updates with more general communications in one place. So in addition to investors they use their regular update communications to target:
- a) Investors they have talked to but who didn’t invest — keep them warm, you never know if they might come back!
- b) Investors they have talked to who might invest in the future — keep them warm and hopefully impressed with your progress.
- c) Advisors/mentors — who have volunteered to help and who appreciate being kept in touch. (I know I do.)
- d) Industry/media contacts — you can’t break through their noise and get attention unless you are part of it.
Communications in this context typically means a push mail. But how often? For me, and I suspect others, once a month is optimal. (More often = noise//annoying; Less often = no consistency//lose mind share).
When it comes to email there are two basic options for style that I have seen work well:
- a) Informal email — +ve feels personal, is easy and convenient for small lists/ -ve looks unprofessional. But this is definitely a good place to start.
- b) Structured email (using MailChimp, etc.,) — +ve looks professional and is much better for a longer lists especially since your audience can self subscribe/unsubscribe and you can track that/ -ve feels impersonal.
So more appropriate as your list and reach grows and also if you want to project a different image. Angela Campbell at Agora Fund has a very slick message in this format.
What about content? I have seen excellent concise messages that combine business updates, team updates, fund raising updates, media coverage, upcoming stuff but also with some fun included. (I always enjoy the Hitlist GIF of the month from Gillian Morris CEO of Hitlist!). All this content can be used to convey a sense of progress and momentum. (Which is vital for your “not yet but might be investors” to sense.) By the way, Gillian treats her updates like a blog post… so there is a backlog out there too. And she has her own guide to what to include in an update. Check out: “How We Got to 200,000 Users With No Marketing Spend”
Importantly, in my view at least, the better notes ASK for something. The conversion rate on these asks might be low but the startup community likes to feel involved and helpful so they will respond when they can.
Given before you get: celebrate others! Maybe it’s just me but some of the updates I appreciate the most and find the most “genuine” are not all about the founder/company sending them. Rather they give before they get, by which I mean they celebrate people in their ecosystem. So folks that helped them in some way. For example, Erica Berger at Catchpool incorporates an “In gratitude” section.
Unless you are into full (and competitor helpful!) transparency, formal “investor only” reporting with financials is a separate communication. This will typically be to preset “information rights” timetables.
BUT in your financial reports out to investors you don’t want to make ANY extra work for your self: don’t reinvent the reporting wheel. For example, if you have committed to quarterly financials by way of information rights in a note, but don’t have a Board yet, just take the three basic financial statements out of quickbooks and send them out each quarter. Maybe with some commentary in the body text — but that’s it.
Keep it simple (stupid) when you do have a board. Even if it’s a three-person board lite, you will have to do some more detailed financials on a quarterly if not monthly basis. In this scenario, repurpose and send to investors a subset of that material which you have had to prepare anyway. I.e., don’t create any extra busy work just to service investors. (Depending on how many investors you have and how engaged they are maybe do an occasional conference call with them too.)
Assuming you get further along the growth curve and your board reporting requirements go up … just go with that flow in terms of repurposing what you have prepared already. Obviously the later stage board sees considerably more than you would want to share with shareholders. So in this scenario the question should always be what you cut out, never what you should add. At least from my portfolio, the standout in terms of substance and usefulness are the updates Erica Trautman, the CEO of Series B funded Rapt Media provides.
Image credit: CC by kimba Howard
