The Why and How Of Updating Your Angel Investors
There is a plethora of information on the internet on how to enhance your chances of success in new enterprises. Your investors' care and feeding, on the other hand, is a mystery. Regardless of how much Lean Startup testing you perform, one of the most basic and undervalued skills a startup CEO must have is the ability to keep investors informed, excited, and interested in the company's growth. #ThinkWithNiche
There's a reason for this: the CEO is the primary point of contact for investors seeking information about the company. It's a way for investors to keep an eye on what's going on and engage in the company in a basic fashion. Many early-stage investors (including ourselves) have made more than 30 investments, and we asked them for advice on how to connect with them and keep them up to date on the firm's progress. The experiment's results are as follows.
1) Keep in touch with your investors on a frequent basis, even if it's only every 1-2 months if you're in the early stages, and every 2-3 months if you're further along. If you have a regular advisory board or board meeting, this is an ideal time to send out an update. You and they will both be OK if you write them an email instead of phoning them. Consider sending this letter in a similar style to your investors, mentors, advisers, and staff. Also, if you call them again, they will be more up to date and efficient.
2) Furthermore, keep it brief. There should be no more than two pages. While your investors are interested in what is going on in your company, they do not need to hear every single detail.
3) Utilize a model. One of my favourites is the TechStars one. Katie Rae and Reed Sturtevant demonstrate how to engage with mentors in such a way that each letter builds on the previous one in their TechStars Boston seminars.
4) Inform them of your plans (now). The fact is that your investors don't always keep up with all of your activities, news, tweets, and pivots as well as they should. Always provide a one-sentence description of what you're doing right now as a pleasant reminder. You will also be required to write (and read) a one-sentence description. Finding a good site is one of the most difficult tasks in the startup industry.
5) Then, tell them about one or two strategic challenges you're dealing with right now. Do you need to make some difficult choices? You'll be surprised at how quickly an investor responds. Furthermore, there's a good possibility they've seen this movie before and can help you make a better decision. However, if it is a personnel issue, you should proceed with caution.
6) Be truthful while keeping your secrets to yourself. Is it OK to you if this email ended up in the hands of your competitors or in the public domain? If not, you might want to think about shortening it.
7) Only request 1-3 items. Do you want a more in-depth look at a particular subject? Ask Do you require certain critical persons to fill a position? Ask. Do you want them to share some important news with their friends and followers on social media? Simply ask; don't be proud or shy. 90% of the time, the investor will be unable to assist, but when they do, it is generally pure gold.
8) Cast a wide net, but do it with a bcc strategy. If you have a broad network, it is more likely that someone will be able to help you. You should, however, respect your investors' privacy and avoid disclosing any sensitive information in the letter. It's a common blunder of mine, so when in doubt, leave it out. Create a basic mailing list so you don't have to enter email addresses manually every time.
Every piece of correspondence should be preserved and saved in a shared folder. Your investors will like the fact that they do not have to be well-organized. Despite the fact that this tip is so simple, far too few individuals take it. You are more than just a thought in the thoughts of your investors. Make an easy-to-access folder that has all of the information they require. Include a link to the shared folder that contains the whole package. Make sure you have all of your prior communication, as well as your most recent pitch deck, any financial data you want them to see, and so on. It is conceivable to have two separate files, one complete for the inner circle and one redacted for the larger public.
A start up’s collapse can be caused by a number of causes, the most common of which is a lack of funds. Investors who are well-informed are often happier and, at the very least, better capable of assisting others. Furthermore, if you want to obtain another round of funding in the future, your angel investors are likely to be the ones who can make introductions. It will be easier for them to do so if they hear from you more frequently than once every 12 to 18 months when you need someone to sign some paperwork. Remember that this is as much about you as it is about the other person. This method should take you no more than an hour or two per month. Aside from that, if you follow the processes right, creating these updates isn't a complete waste of time.