Once you’ve raised capital, you’ll have shareholders. Quite likely, these shareholders have invested their money to get a return. But more-often-than-not, at the seed or angel round, they’re also really interested in investing their time to help you help them get that return. So it’s good practice to do regular and quality shareholder updates.
Updating investors is important to keep them in the loop, so that they can offer advice and help and also be more involved in you so that when you do go out and raise the next round, they’ve established a pattern of what you’re like and are more likely to follow-on. As Alan Jones often says, “investors invest in lines, not points” referring to the need to establish a track record.
The worst thing you can do to an investor is ignore them and then 12 months later ask them for more money. It’s far better to share information with them and let them choose if they want to read it or put it in the ‘for later’ folder.
The frequency depends on you, your investors and your startup – but every few months is normal. At a minimum I’d say quarterly but my personal preference is monthly or every 2 months.
To make this easy, the BlueChilli team have put together a quick investor summary list which contains the headers that we believe investors need. Under each of these, write a small paragraph or throw in some screenshots. It doesn’t have to be a document, a simple email is usually good enough.
- Cash burn
- Product updates
- Marketing update
- Big wins
- Big losses
- Questions and concerns
- Major hires / fires
- Distribution / partnerships
- Inbound M&A / VC interest
(We’re even working on a way of automating most of these with a startup reporting startup – but more on that later!)
So set yourselves a reminder in the calendar to shoot the update through on the 1st day of each month, if you miss one, no biggie, but at least you’ll get in the habit of keeping investors in the loop.
And note – the information in an investor update is very different to a board update!