June 11, 2014
This post includes extra content from Startup Mixology, my upcoming book on starting up – including how to prepare yourself for the harsh reality and celebrate positive moments along the way. Go here to pre-order the book (due July 8) and subscribe to updates!
Once you’ve landed funding, you’ve got another set of people to manage – your investors.
You should come up with a plan to keep your relationship with investors thriving, including regular updates you send about your progress. According to Startup Boards, you start this process by understanding why they invested, what their goals are for your company (in terms of milestones, exit, or valuation), and how they can help you. You should also ask how they prefer to be communicated with.
Communication can take the form of a short email, sent maybe every two weeks. Mark Suster, a general partner at Upfront Ventures and prominent VC blogger, recommends an update (in bullet points) on what you’ve done in the past two weeks and what you plan to do in the next two weeks, plus any items you could use some help with. You want to keep it high-level so it’s easy to read – because you want your investors to read it. Suster also recommends periodic phone calls, as short as 10 minutes each.
Every investor has a different style, so find out what your investors prefer. Union Square Ventures cofounder Fred Wilson (another prominent VC blogger) likes ad hoc phone calls and emails rather than scheduled reports. If you do send reports, Wilson wants to see “just the Good, The Bad, and The Ugly in five paragraphs or less,” he says. “Don’t spend hours editing it. Just put down your thoughts and hit send.”
The key here is making it as easy as possible for investors to get involved and help you out. Another way to facilitate that is to have a central place where they can look up any information about your company they might need. Dharmesh Shah, the cofounder and CTO of HubSpot, recommends keeping a shared folder of correspondence and important notes on your company that investors can reference any time. One item to include is a short statement of what you do and how you compare to key competitors. Update it regularly so they can better talk you up with their contacts. Now you have additional advocates out there in the field.
When there is big news in your industry, like the release of a new iOS, send a special update to investors about how it affects you. You should also remind investors regularly about how much financial runway you have left – these are questions their VC partners might ask about.
If investors have the most updated information about you, it’s easier for them to connect the dots to potential future investors and be on board with big decisions you want to make.
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