After taking our investment, keep us in the loop

Congratulations. You’ve had a successful seed raise and collected checks from angel investors and a couple of early stage funds. Now you’re busy building the team, extending the product, and signing up customers. Those investors are busy people and the only thing they want is that big check when you exit, right?

Not really. The biggest frustration I hear over and over from other angels is that after taking our money, we never hear from the company again. What we want more than anything is to be informed of your progress and stay involved in the business.

Most angels invest less for the financial rewards than to be part of the startup journey. We invest to give back to the community and help get new ideas off the ground. If it was strictly about financial returns, I’d be better off investing in S&P index funds. Or handing my money to a big fund. But where’s the fun in that?

We picked your startup out of the hundreds of pitches because we believe in you and your mission. We’re proud to be an early investor and truly want you to succeed. And we want to know how our investment is being used. Or at least whether the company is still alive nor not.

The problem, though, is that unlike public stocks, there’s no stock quotes, no quarterly filings, no annual report, no press releases. Sure, we can look at your website or follow your twitter feed, but how much does that really tell us? We desperately want to stay in the loop. As an insider. And hear regularly what’s going on.

Yes, we know you’re insanely busy. And building the product and signing up customers are always the priority. Still, I’ve noticed a strong correlation between startups that excel at investor communications and those that succeed at raising the next round. And succeed at building a strong business. In fact, the best predictor of success I’ve seen is strong investor communications.

Without fail, the startups that provide investors with a quarterly newsletter are professionally-run operations. The team knows what it’s doing and how to communicate with customers and investors alike. This translates to better sales, better support, happier customers, and happier investors willing to invest in the next round.

If you want to look like one of our good investments instead of one of the seat-of-pants, flailing investments we regret, send out a well-written quarterly update.

Why should you bother? Think about who’s going to invest in your next round. Many of them will be the same people who invested in your previous round. The more you keep us involved, the more committed we remain. Even when you hit a rough patch.

Even if we don’t invest in future rounds, the investor community is pretty tight-knit. Later investors often reach out to earlier investors to get their impressions of the company. “Are they still alive?” is not the ringing endorsement you want to get.

Most importantly, the update is not only the time to tell us about your wins, but let us know your challenges.


Tell us your good news. But tell us your bad news, too!

Most founders seem to think they should tell investors only their good news. But every angel investor will tell you that’s a mistake.

You probably think that by only telling us your successes, it’ll make you appear successful. That may work with customers. But not with investors.

We get it. We really do. We understand that startup life is 3 steps forward and 2.9 steps back. On a good day. You lose deals you were sure were in the bag. Or you haven’t hit your numbers. Not even close. Welcome to the club. No startup in history has ever hit their numbers so get over it and tell us what you have achieved and why it’s about to get better.

We know there’s as many setbacks as successes, so when we hear only good news, we know we’re hearing only part of the story. If you tell us everything, bad news and all, we’ll be able to appreciate the good news and celebrate those wins with you.

More importantly, we want to help. Even if we can’t solve your challenges ourselves, we often know people who can. Many of us have walked down the same path you’re on and are happy to loan you our shoes.


The news we want to receive

Startups that succeed at investor communications follow these best practices:

1. Quarterly update. Every quarter. Put it on the calendar for 2 weeks after the end of the quarter and get it done. With the following information:

  • General update: has the plan changed? What’s going well, what isn’t?
  • Milestones: big customer wins, growth statistics, all the good news
  • Challenges: all the bad news and how you’re planning to overcome it
  • Asks: How can we help?
  • Raise: If you have a raise open, list the details
  • Financials: summary P&L, balance sheet, current runway

2. Annual call. Once a year, invite all your investors to a conference call. Give us a short presentation of what’s been accomplished and where you’re going this year. Reserve half the time for questions from investors so we can interact with you.

3. Reach out as needed. Don’t forget we’re part of the team, and best, working for free. If there are things we can do to help, from finding a new CTO to introductions to potential customers to advice on working with your Japanese distributors, reach out to us. This could be a personal email to a specific investor or a group message asking if anyone can assist.


Most of all, what we want is for you to consider us part of the team. The more open you are with both good news and bad, the more help you’ll get, and the easier your success will come.

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