Updating your investors.
tl;dr — write the damn updates and share them.
Ask and it will be given to you; seek and you will find; knock and the door will be opened to you. — Matthew 7:7
But most people are like: nah, I’m all good Jesus. I’m heads down building product.
Fast forward 3 months: OH SHIT. We’re running out of money and the original model we were going after isn’t going to work. Do you have time to vet this new strategy? Can we chat about how to reduce burn? Do you know anyone trying to invest in this space right now, we could use the cash before we get to our A round.
Whoops.
It’s alright though. Most people do this and your advisors and investors are ready to get to helping (one hopes). Unfortunatley, we’re also underprepared because while you were building your company we were doing a bunch of other things:
- putting out other immediate fires
- investing in other companies
- meeting with people (likely wasting time ;))
- hanging with family
- working our day jobs
- living life and all that jazz
So what happens is our “life and attention stack” gets jammed up with a bunch of other things and we might not think of you or the company for months at a time. Maybe we’ll retweet something easy, but most of the time I’m not “feeling worried” about companies. I really believe in the founders and try to help without interfering.
David Krane told me his favourite people just email him the same thing 10 times. He’ll eventually get to it as it gets pushed to the top of his ever growing stack. (Sorry if I just 10x your email David. At least I can say I 10xed something in my lifetime).
Help me help you
Sometimes it’s just a matter of periodically getting on our stack. That’s why I think investor updates (and even to broader groups) are great. You never know what one hour a month could return.
But it’s not a lottery. This is real work. When you take the time to summarize the state of your company you are clarifying your own perception of what you’re trying to accomplish. And if you can articulate your challenges, we can either help or at least gut check them for you.
Being proactive also allows investors to warm up any help they are planning to provide. Urgency is a great thing, but it’s taxing and limiting in terms of available options.
Some of the most common excuses for infrequent (and poor) investor updates I hear are:
They’re too busy I don’t want to bother them.
Nah, you’re too lazy. And I’m too lazy to bother you too. But then again, I’m not responsible for employees, customers, and their customers.
I personally think writing is therapeutic. You don’t have to be good at it. You just have to sit down and write. I suck at writing. Everyone sucks at everything at first (I guess that’s even more literal when thinking about a baby).
So don’t worry about if it’s good or bad, just write the damn update.
I don’t have time to write updates for people.
There’s a lot of shit you have to do as a founder. I understand that. But to hear that a summary of your goals, accomplishments, and upcoming challenges is not part of your regiment is scary.
Consider the two cases:
You understand your business and what you need, but you don’t write a short note to those trying to help you achieve it.
Or you don’t know what your business should be doing.
Updates either force you to think about the business holistically or help you vet the current state of affairs (in your mind).
I know what I need and thoughtfully ask the right people at the right time.
Perfect!
But you’re likely leaving help on the table too. And if you’re worried about too many cooks in the kitchen: I recommend calling out the specific people you want to help in specific matters. The more specific your asks are the more likely they will happen.
But just because you have specific requests that you think will be fulfilled by specific people doesn’t mean the rest of your investors aren’t capable of helping. I make this mistake a lot, especially with my parents. Because they can’t really explain what it is I do I don’t include them in decisions or questions related to tech. But I’m a fool for thinking my parents are lame — because at one point (probably before I was born) they were really cool and tackling these kinds of challenges.
So were your investors.
Most investors, especially those that aren’t big-time names, are desperately trying to be helpful and grow their own brand. And sometimes they have the ideas, skills, network to be helpful. Give them a shot. They gave you a shot!
I don’t have advisors, and I don’t want to share everything with investors.
Invariably you have advisors, just not formal ones. The people you keep going back time and time again because you value their opinions and their ability reinforce ideas you’ve constructed: those are good people.
Many people join accelerators because they want to generate the network they don’t have yet. But the internet has helped to connect many people and great entrepreneurs get to the right people they need.
An Aside: If you’re interested in getting lit up go take a meeting with Qasar. If he doesn’t regale you with stories from the trenches of GM and his own lost youth, you’re not getting far with him.
Adding advisors formally is great because it sets up a contract and commitment. It forces people to say they can or cannot help you in an ongoing basis, which is really important!
The rule of thumb I was given sometime ago went something along the line of this:
Find and maintain something like 3–6 advisors. Most won’t truly be able help you in huge magnitude. The key is that once in a while one really will.
I’m a fan of aligning incentives and as result always believed in equity grants for Advisors. I think 0.1–0.25% vesting over two years is the right amount.
At Punchd we had a few really awesome advisors like Karl Jacob and David Marcus who provided us feedback and guided us through acquisition. I still meet with Karl today as he helps me navigate my career in technology.
Advisors rock. Challenge them and be challenged by them.
So let’s start writing these things, right?
Cool, I wrote a short template to help get you started. Each company is going to have different metrics and thoughts to report so copying this verbatim is a bad idea. But if it gets you 50% over the hump, I’ve succeeded.
http://bitly.com/investor-template
Okay, great. Please leave me some feedback and I’ll merge changes into the master template!
Also, @Jason wrote about this a few weeks ago (as many others I’m sure) and it spurred me to say screw it and move this from draft to production. So if you don’t believe me, maybe you’ll believe him! Thanks.
In Summary
Good investors help their startups. Great investors don’t interfere with their startups and are invaluable when founders ask for help.
The primary reason you should send frequent updates to your investors is to solicit their help in critical areas to improve your business. Tips:
- Your updates can go out to more than just your investors. Where it makes sense include your investors, advisors, and friends of the company (some information should be kept to certain groups).
- Updates are meant to keep your company top of mind in the people who are supposed to help you. People get distracted all the time and will forget about you. Try to add something fun (meme, anecdote, something personal) that you’ll look forward to people reading.
- The more specific your asks are the more likely you will receive help. Introductions to specific people or companies are better than generic requests for deal / business flow.
- Padding your stats is _not_ the goal of your updates. Being pragmatic, transparent, and simple in your updates means you’re shooting straight. Focus on that and the better your fortunes will be.
- Make your updates brief and easily digestible with numbers and bullet points. I think longer updates are great if I have time, but if I can quickly help / get the information I need I am more likely to act.
- Your updates also encourages accountability and forces you to think through (and write) your goals.
Don’t underestimate the power of your friends and their friends. Your ability to communicate both externally and internally will be the difference in having meaningful outcomes and not.
I used to think about this a lot when starting Punchd. We had mentors around at 500 Startups all the time, but shortly after the tech boom accelerated people’s time got (even more) crunched. Investor updates seemed like an easy way to stay engaged with people and it cemented more in my head as I jumped onto the investing side of things.
This post and template part of a set of tools I’ve been working on and thinking about making available to everyone. Others include:
Cheers, and find me @niket
