After investing in nearly 200 companies over the past four years, we get a lot of updates from our portfolio companies. These range – as you can imagine – from glowing litanies of milestones exceeded and customers acquired to the more ill-fated. Even more rare is the ultimate update, from a company that’s decided to throw in the towel and wind down operations, hopefully returning at least some of our invested capital.
When I was CEO of Revision3 we had a strong group of angel investors, along with Greylock Partners, our lead institutional partner. But I never sent out regular email updates to any of these investors – instead focusing on our first monthly – and then mostly quarterly board meetings. In retrospect that was a mistake, because I missed out on a lot of potential help – and also sent the wrong signals to those folks that believed in us so much they gave us cold hard cash.
I only realized this the other day, over lunch with legendary angel investor Jason Calacanis. Here at Social Starts we’d invested in three of the six companies that recently graduated from his accelerator, and I was explaining how one of the founders – Mei Siauw, CEO of the incredibly useful sales tool LeadIQ – was such a great leader, and that her investor updates were clear, succinct and powerful.
“Those updates are a real leading indicator of success,” Jason explained to me. If a company is sending them out regularly, it means they are on track and doing well. “It’s when you don’t hear from them,” he continued, “that you should be worried.”
Calacanis went on to explain that if a company is not communicating regularly, it usually means one of two things: Either they’re so darn busy trying to deal with unexpected and overwhelming success, or (more likely), they’re failing badly.
He’s right. And since Revision3 was never crazy-pants successful, apparently I was signaling failure to our angels every month -- despite the fact that when we finally sold to Discovery, everyone from our early investors to most recent hires made money.
So yes, regular investor updates should be a critical part of any startup CEO’s todo list. But how often should you send them out? In the early days, weekly updates make sense – but you should at least communicate with your investors and other backers monthly.
Your updates should absolutely include details on your progress toward the goals you’ve set as a company – and committed to during the fundraising process. As one of the leading seed and pre-seed investors in New York and San Francisco, here at Social Starts we insist on formally codifying the milestones needed to get an early-stage company to the A round. These typically include Monthly Recurring Revenue, Unique Users per month, or other measurable and clearly articulated goals.
So yes, those updates should clearly explain how you’re doing, where you are falling short and where you’re exceeding expectations. But there’s a much more important reason to send out investor updates – and one that I kick myself for not doing at Revision3. If you’ve done a good job building a strong stable of seed and (eventually) institutional investors, chances are you’ve got a lot of really smart, opinionated and connected people on your list. And they are (mostly) all dying to help.
Maybe you’re looking to hire a lead developer, or need assistance building an effective sales team. Perhaps you’re looking for contacts in the press, or with a large strategic prospect. Simply asking for help in those areas that are vexing your organization puts an incredibly valuable and diverse group of really smart folks to work helping you solve your problems – or expand your opportunities.
As early-stage investors, we love to help. We aren’t going to do your job for you – but we can easily make introductions, and occasionally provide more detailed strategy help as well. Others on your investor list may be excited to dive in more deeply. But you’ll never know if you don’t ask.
One tip, though, when you ask for help: be as specific as possible. Don’t just ask for “contacts at Google,” but ask for a specific person by name, or at the very least a specific job title. The more granular your help request, the more likely you’ll get positive results.
So make sure to set a formal task to deliver investor updates on a regular, recurring basis. Don’t blow that task off because there’s too much else to do. Your investors want to stay current – and most of them want to help too. Even better, they’ll give you that help for free.