Communicating w/ Investors

Finally, after several weeks, months, or even years of pitching to VCs, you were able to find some backers for your startup. Another obstacle to overcome is how to effectively communicate with investors, keep them satisfied, keep them confident in your product, and make use of their knowledge for the benefit of your company. Here are some tips. This page has been partially sourced from Rundit.

More of a visual learner? Watch this video:

Now onto the good stuff…

As a person who has raised funding from individual investors and VCs, what are your advice when it comes to communicating with investors?

Jori: 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.

  • Clear: Your Startup isn’t doing great?

    Pick up 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. 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, they don’t feel comfortable in unpredictable situations. Even when you are nailing your KPIs, 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, it’s so obvious that you work in the fast-paced startup world, so your communication should 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: Needless to say, you should be consistent when it comes to contacting your investor.

    Avoid providing your investors with irrelevant updates and wasting their valuable time. 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, just give them the burn rate and not something else because those numbers happen to look better. 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, 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.

Action items:

  1. Send a short message bi-weekly on key issues and news.
  1. Send a metrics update once a month, see which metrics should be included in your report here.
  1. Send a textual update monthly or quarterly.