Pitch Perfect
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Pitch Perfect

How to keep your investors updated

Pertinent data, current challenges, and context. Send it monthly. Start early.

SCIENCE AND CLIPBOARDS. Must be some pretty serious stuff. Oh, stock photography, I love you so.

With all of my startups, I’ve done a monthly investor/advisor update. From day one — long before any advisors or investors ever got involved in the startup. It’s good for the company — and for the senior team — to keep a finger on the pulse of how you’re doing, and serves as a reminder how much progress you’re making as a company.

Bad news rarely gets better by hiding or delaying it.

Monthly. No exceptions.

Make a pledge to yourself to do it monthly. Without fail. No exceptions. Why? Because when you’re stuck, heads-down, building your startup, it often feels like you’re marching on the spot. It feels like milestones are few and far between. Victories are rare. And the hits just keep on coming.

Except that’s not true. Not even slightly. The problem is that as an early-stage startup, you’re moving at a neck-breaking pace. Your perception of time goes out the window. Forcing yourself to re-read the previous month’s update and writing a new one is a way of keeping a sense of perspective. That problem that threatened your startup a month ago? It’s a distant memory. That hire you were worried about? Someone better came along, you hired them, and life is awesome.

Being able to go back through your monthly newsletters, you can see the progress you’ve made. It’s often encouraging reading, even when it feels you’re moving slowly or not making progress.

In my companies, I’ve also sent a (usually sometimes abridged) version of the update to everyone at the company. It has usually been appreciated — people like to know what the current challenges are, what is going well, and how the graphs are looking. It’s part of the ongoing conversation you have with your team.

Nothing should be a surprise

Much like board meetings, your investor updates aren’t the place to break ‘news’ to your investors. If there are significant movements or problems, talk to your investors before you hit ‘send’. It may be tempting to hide bad news at the bottom of a newsletter, but don’t. The newsletter is a stake in the ground, not a way of hiding from interested parties.

Bad news should travel fast.

Don’t hide bad news or setbacks from your investors or advisors. It’s crucial that they know, so they can help support you and help you find solutions. Bad news rarely gets better by hiding or delaying it.

What goes in the investor update?

Most importantly, remember your audience. Your investors/advisors don’t have infinite time to read your updates. Borrow a trick from journalism: Use the “inverted pyramid” structure used in newspaper articles. The idea is to add the most important info at the top of the update, and to go into more detail further down. Don’t ‘bury the lede’ — celebrate the victories and expose the challenges right at the top.

1 — Introduction

2–3 paragraphs only. Include the top 3 things that went well that month, and the top 3 challenges / problems you ran into or are working on. Keep it short.

I usually like to do “Highlights & Lowlights” — i.e. things worth celebrating and things that were challenging, but you do you.

2 — Key Performance Indicators

Every businesses have numbers that represent how well the business is doing. If you’re selling widgets, it’s probably the number of widgets sold. It could also be your gross profit margin, your manufacturing yield. If you’re an app business, you’re tracking monthly active users, usage growth, or in-app spend. If you’re a SaaS business, it’s churn, up-sells, and monthly or annually recurring revenue.

I like to include graphs — month-on-month or week-on-week — with some brief analysis showing that you’ve thought about why a graph is pointing up or down. Kiss Metrics has a great blog post about how to use metrics to make decisions. Also look at Pirate Metrics.

Once you have a significant amount of data, consider trailing graphs — using trailing 12-month graphs can help iron out seasonality in your data, and helps give a clearer image of how your company is growing and developing.

3 — Runway & cash-out date.

How much money is in the bank, how much revenue is being generated, and how much are you spending per month? A crucial figure for any company — even if you choose not to report it in your monthly updates, you should be aware of your runway.

4— Personnel

Hiring the right people is one of the most important parts of the business, so I like to include any new team members in the newsletter. List what you are hiring for, and any new hires you’ve made. You never know: Maybe your readers have the perfect applicant in mind

5— Product

You’re a company. You have a product or service you’re offering. What’s happening on the development side? How are current products developing, and what’s in the pipeline for the future? Keep your audience in mind here: it’s easy to get too detailed or too technical. Keep it simple — it’s often a good idea to use a “We are doing X, because this makes life better for customers in the following ways:” format. It helps keep customer focus.

6 — Competitor news

Any company has competitors. Keeping tabs on them is important, and whether or not you choose to keep it in the newsletter, it’s worth keeping monthly tabs on what they’re up to.

7— Biggest Challenge

What’s keeping you up at night? Tell your investors/advisors about it here, and ask for help. I usually foreshadow the Big Challenge in the intro paragraph; this is what you really want their help with.

Remember that your advisors and investors are working with you because they believe in you. You should absolutely tap into this resource and summarize what you need assistance with.

Use SMART goals & actionable KPIs

Finally, a quick note on KPIs. You should have a small set of 5–6 KPIs that really track what’s going on in your business. Vanity metrics are banned. Nobody cares about how many Twitter followers you have or how many visitors there are to your website, unless these convert into something else (or, of course, if they are key to your business model. If you are a news website, ad impressions is your business model, and reporting pageviews makes perfect sense).

Be honest with yourself. Be honest with your staff. Be honest with your investors. That’s the only way to design real KPIs that give you actionable data.

Similarly, if you’re reporting on goals in your newsletter, make sure they’re SMART goals — “we are going to improve our app” is a good idea but a terrible goal. “By 1 October we will increase conversions from free users to paid users in our iOS app by 5%” is far better: It’s specific, measurable, realistic, and has a clear deadline.

Haje is a pitch coach based in Silicon Valley, working with a founders all over the world to create the right starting point for productive conversations with investors — from a compelling narrative to a perfect pitch. You can find out more at Haje.me. You can also find Haje on Twitter and LinkedIn.

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