Why We’re Hosting An Owners’ Meeting as a Startup
We have no institutional investors and no one asked for the meeting
This week, Mizzen+Main will be hosting our investors in Dallas from across the country for our first annual owners’ meeting. This is a very unique approach to interacting with investors as a private company. It makes us much better, and much more valuable, as a business.
Startups tend not to share much information.
This is to their detriment.
Before sharing some perspective on this, here’s a story demonstrating the impact of overcommunicating with your investors:
I sat down with one of our angel investors in New York a few weeks ago. He runs one of the most prominent investment firms in the world. I’d be willing to bet a lot of businesspeople would pay him for an hour of his time. We spent that hour strategizing together, talking about future plans, scrolling through his rolodex (aka iPhone) for strategic introductions, and laughing about some of the ups and downs of the journey. I didn’t waste a second filling him in on anything… he already knew pretty much everything about our business, including key team members’ names. How much more valuable was that hour? Incalculable.
We do not have many informational requirements in our corporate governance documents. We don’t have any institutional investors. None of our investors asked for a meeting. So why are we doing it? We’re hosting our first annual owners’ meeting because we will be a much better company for it.
Vegas Tech Fund is our only quasi-institutional fund — they do not act like an institutional fund and came in on our first major fundraising round with no requirements different from any other investor. Post close, they sent out a deck of helpful tips and offers to help. One stood out: send out updates to your investors. The more information, the better. Let your investors help you.
In March 2015, I sent out a 2014 year end review and 2015 lookahead as our first update. It was 30 pages long and an absolute monster to write. We only had 4 employees at the time. There definitely were other tasks I could have spent my time on. I’m sincerely glad I chose to focus my effort on sending out that update. Since then, I have sent out a 10 page quarterly update every quarter and followed up 2014’s Annual Update with another 30 page Annual Update for 2015.
When I decided to raise another round in the middle of last year, 50% of the round was filled by existing investors upon receiving a 7 page update expanding on on the prior quarterly update along with additional information about the strategy of the fundraise itself.
I speak with most of our investors somewhat regularly. We discuss their insight and introductions they make because they already knew so much of what has transpired in our business. They are also keenly aware of our strategy and plans for the months and years ahead. I don’t waste their time — or mine! — with long phone or in person catch ups on what’s been happening. They already know.
We can get to the point, they can add value, and I can get back to executing and growing our business.
Our truly extraordinary leadership team has spent the last two weeks preparing a comprehensive update to present this week. Most of what is shared will already be understood with some deep dives where appropriate and updated thoughts based on our experiences. We will gain tremendous insight from our investors and help them better understand our decisions, decision making, and vision for the future. When we need help, they are more likely to give it. When something goes wrong (and things always go wrong), our investors know what we’ve been doing and why we’ve been doing it. This makes for an infinitely better situation for all parties involved.
Ultimately, choosing to share a significant amount of information with investors, unprompted, results in several tangible benefits of truly meaningful value.
- Increased investor participation and assistance. Investors can provide so much more than dollars. Make that easier for them. Trust me, they want to add value. It helps them too!
- Increased investor confidence and excitement. Even in the face of stumbling blocks, your investors are much more likely to support your efforts if they aren’t kept in the dark. Additionally, your investors likely have a full time job — this is something different and exciting for them. Share the journey!
- Consistent focus. Ongoing updates require you, and your team if you have one, to focus on what you’re doing right, what you’re doing wrong, and where you could or should be spending your efforts. This benefits the business in more ways than you can possibly imagine.
You, your business, your investors, your team — everyone stands to benefit significantly from sharing as much as possible with your investors. Give it a try.
