There is already tons of information online about how to improve the odds of success in new ventures. But almost nothing concrete is available on how to keep your investors happy. This is such an underappreciated topic because your investors have made a bet on your company and they deserve to be appropriately updated on what is happening with their investment. Because of this gap in the informational market, I am going to give you some approaches to keep in mind when you are keeping your investors happy.
Write Your Investors Consistently
I would recommend every 1 to 2 months (during the early stages), and every 2 to 3 months if you are a bit further along in your companies’ development. If you have a regular advisory board or board of directors’ meetings, that is a good time to send out an update. This is preferable to phone calls, both for you and for them. If you are smart about, you will send this letter out, in more or less similar form, not only to your investors but also to mentors, advisors and staff.
This is a great way to keep everyone in the loop with how the company is performing. Everyone involved with your company will appreciate this, not just your investors. You can also follow up with calls, the calls will be a lot more productive because your investors will have the information they care about at hand and can focus on how the company should be moving forward.
Keep it Short
Two pages, max. Your investors want an overview but do not want a crazy detailed document that is going to take all day to get to the point.
Use a Template
I have had friends who have found success in using the TechStars template. Apparently, Katie Rae and Reed Sturtevant of TechStars Boston teach their companies to communicate with mentors in a way that each letter builds on the previous one.
Often, the letter gives both highlights and low-lights since the previous communication, sets some short-term goals, and then reviews the progress, or lack thereof, on the goals set earlier. Just knowing that you will be producing a report card helps focus you on the important stuff and ensure that things do not get forgotten.
Remind them what You are Doing Now
I know this is going to sound a bit odd, but often your investors are not doing a great job at keeping up with everything your company is doing. Always include a one-sentence description of what you are doing right now as a friendly reminder. A side benefit to this is that it forces you to write your one-sentence description. This is one of the hardest tasks in startup-land.
Tell them the One or Two Strategic Problems
You could have a few critical decisions you are struggling with. Investors generally love talking about this kind of stuff so you will be amazed by how quickly they respond. Any experienced investor will probably have the expertise to help you through these kinds of strategic issues. They can guide you towards what will work for you and the company. But if it is personnel-related, you may wish to be more circumspect.
To recap, establishing the right kind of communication with your investors can be a challenge to begin with. But, as long as you keep your communication with your investors consistent and provide them with the information they need, you will find it easier to keep them happy.
Do not sugar coat strategic issues though, investors will often jump at the chance to help with those. Always try to create a concise overview with an equally concise recap to help them follow along with your progress and goals so far.