Monthly Investor Updates
While we’ve only announced one investment at the time of this post, Subconscious Ventures has made 5 investments in startups with a 6th happening in the next week. Since our founding, that’s basically an investment every 6 weeks.
One trend I have observed in this portfolio is that I can often tell how well each company and founding team is performing based on their monthly reports. While this might seem obvious, in early stage investing, it’s very different than quarterly earnings reports of public companies. What I look for is consistency in communication, transparency in hypotheses and learnings, highlights, and asks.
At this stage, to me, monthly is the right cadence. Too many things change in the business if updates come out every 2–3 months. On the other hand, weekly updates are hard to keep up with as an investor, and founders only have so many productive hours in a day.
Here’s what I look for:
- Timeliness — Did the founder send the update promptly at the beginning of the next month? If yes, this shows me that the team is on top of it. While I’m sure they are overwhelmed with opportunities and issues, they are thinking clearly enough to be able to know what they wanted to achieve that month. It also shows the level of rigor the founders are using inside the business. I have seen that founders delay sending out updates as they are trying to get the product release out or close another big deal. Don’t! Those highlights will be in the next month’s update and it’s absolutely fine.
- Accountability — Did the founding team do what they said they were going to do? To be clear, the right answer isn’t always yes. As The Dude says in The Big Lebowski, “New shit has come to light.” The team either did what it said it was going to do or achieve, or it didn’t. Sharing what you didn’t do is just as important as what you achieved. It shows a level of maturity that you are willing to own up to misses vs running away from them. It can also show how you are able to learn and iterate.
- Hypotheses or Insights — “What did we believe to be true?” is the key question. From there, I like this type of breakdown, each with a “Why or why not” question set after. Do we still believe this to be true? Do we have greater confidence that it is true than last month? Are we trying to get to a greater level of confidence? This section is so important. It’s nice that the number of MAU went from 146 to 187, but the insight that CAC is lowest with suburban parents in warm weather climates due to the number of outdoor activities in which their children participate is a killer insight.
- Highlights — This doesn’t have to be long, but several bullets covering any key deals that closed, partnerships formed, marketing strategies that were launched, product releases, interesting metrics that you are tracking, key hires made, or press covering your business. If your business is far enough along to have KPIs, covering those each month is recommended. At a minimum, including how much cash is left, burn and zero cash date is a nice touch.
- Opportunities to help — VC’s are always asking how they can be helpful, and for the most part this is true. Venture Capital is a relationship business and providing value outside of just capital not only helps this investment, but the ability to get access to more quality investments in the future. Founders talk to one another! It doesn’t mean that VC’s are asking to be put to work or accountable to a specific business need (that’s on the founding team), but there are a variety of other ways we can be helpful. Recruiting, fund raising, connections into companies, executive coaching, strategy, and I’m sure I’m missing many other ways. The key here is to be very specific in your asks. “We’re looking to add people in engineering and marketing” raises more questions than, “We need an experienced iOS engineer that has built apps in Swift” and include a link to the job description. “We’d love introductions to potential Series A investors” can be sharper by asking for an introduction to a specific partner at a specific firm and including the reason. “Sue at Blank Check Ventures has invested in DTC businesses like ours at our stage. If anyone knows her well, we’d appreciate a warm intro.”
I know as founders you are under-resourced, crunched for time, and stressed. Here is a tactic I have used to send monthly updates. Block out 45 minutes the weekend prior to the end of the month when you can concentrate and focus. Start by reading the update you sent last month first. This will help you remember where you left off and remind you about what you stated you were going to achieve. Then start writing this month’s update and save it as a draft. If you haven’t used a framework like above, try it out and feel free to make it your own. Set a calendar reminder on the 1st of every month and take 15 minutes to review that draft, make edits as needed, and then click send.
I have found that most investors, stakeholders and friends that receive these updates respond to them. They offer encouragement which is greatly appreciated, thoughts and perceptions as potential customers, and help in the specific ways you have identified needing it. The monthly update also helps investors not be caught be surprise if and when you need to go back to the well.
That’s all for now! Thanks for reading and please share on social.