Say Something

The best sign I have that a company we’ve invested in is dead, or near death, is the silence.

This is why I encourage all the founders we work with to send regular and detailed updates to all of their investors at least once a quarter, ideally once a month.

Even if you don’t have investors yet, the process of taking a step back and asking yourself what’s going well, what’s not going well, and what you could do differently is hugely valuable.

And it doesn’t have to be complex.

In the simplest case just start by sending out the most basic financial details: how many new customers you have, how much you earned and spent in the last month and how much cash you have left in the bank.

Later, as the business starts to grow, include some commentary about the current constraints: why aren’t you growing faster? An update on your team: new hires, open roles, how you’re feeling about the internal culture. Highlight your key numbers: how much are you spending to acquire each new customer, how much does it cost to support each customer each month, and how many customers cancel (or “churn”) each month.

For bonus points, ask other people in your team to contribute a short paragraph about their area - e.g. the product/engineering teams might want to list the things they’ve recently released and the things they are working on next; the customer support team might like to highlight their Net Promoter Score; the sales and marketing team might want to talk about recent promotions they’ve run and the effects of those on the top of the funnel.

It shouldn’t take long as these are all details you should have at your fingertips anyway (and if not, then you have bigger problems than not keeping shareholders informed!) A good, founder-friendly investor won’t ask for anything for their own benefit that you shouldn’t already be collecting - your investor report should be a subset of your management reports.

The thing to aim for is: simple updates on a regular cadence.

Make sure you talk about both the good and the bad. Investors are mostly smart enough to realise that startups are not a smooth curve up and to the right, and we appreciate the honesty. More than likely we will want to try and help you solve any problems you’re facing, when you’re up-front about them, rather than stressing about the fact that there are problems in the first place. It’s a startup. Of course there are challenges!

New founders normally start out with the best of intentions around keeping investors informed, and then gradually the updates start to dwindle. Why? Usually it’s because the numbers aren’t what you’d hoped they’d be (or even what you confidently predicted they would be a month ago) and there’s some embarrassment surrounding that. That’s understandable. The inclination is to wait until the numbers are better, after the next marketing push or the next product release. But in doing so, you’re keeping information out of the hands of the very people who might be able to help. So, as soon as you know, or even as soon as you have a sense that things are off-track or not moving as swiftly as they should be, try to have the habit of expressing that, rather than keeping it to yourself hoping that you can fix it before anybody notices. The huge advantage of getting help from your investors and advisors is that the problem may be much more easily fixed than you fear.

And, the even bigger payback on doing this will come when the time comes to raise further capital in the future. There is nothing worse for an investor than an email from out of the blue asking for more money. If you’ve taken the time to keep everybody informed of the progress you’re making then you’ll spend much less time telling us where you’ve been, so you can focus on where you want to go next, and you’ll likely find us much more enthusiastic about continuing to be part of the journey.

So, even when you think you have nothing interesting to say, say something.

It could make all the difference.

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