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Hello! I’m Aaron Kardell. In this Sunday newsletter, I pick one random topic weekly to go deep on and have some disparate quick hits at the end.
Today, I composed my final HomeSpotter investor update, covering details on the final payments HomeSpotter investors will receive.
This elicits a range of emotions for me, partly because it’s the final update. I feel a sense of finality and, with that, the most minor sense of loss. I’m also grateful to our consistently supportive investor base. I also remember various good times from running the business. Still, in particular today, I miss working with our COO – he and I used to collaborate on these investor updates.
In transparency, in the early days at HomeSpotter, I did a poor job of doing regular investor updates at a consistent frequency. By the end, we got better at committing to getting those updates out quarterly.
I’m on the other side now, occasionally receiving investor updates from companies directly and indirectly through funds I’m invested in. While a small sample size, it’s evident that a few early-stage startup founders have investor updates dialed in, and many leave room for improvement. I hope this post can inspire the next founders to level up their investor update skills.
Why are investor updates important?
Investor updates are critical for maintaining a good relationship with your investors. They help to build trust and transparency. Regular updates also show that you’re committed to the company’s success and take the time to keep your investors informed. By sharing key metrics and milestones, you can help your investors understand how the company is progressing and what areas need improvement.
Another benefit of regular investor updates is that they can help you attract new investors. When potential investors see that you’re actively communicating with your current investors, they’re more likely to see you as a trustworthy and reliable investment opportunity.
How should you approach providing good investor updates?
Here are some tips to help you get started:
1. Set a regular schedule
Setting a regular schedule for investor updates is essential. This helps to ensure that your investors know when to expect updates and can plan accordingly. Whether it’s monthly, quarterly, or bi-annually, make sure to stick to the schedule.
My personal bias is that you communicate with your entire investor base quarterly. It would be best to consider more frequent communication with a small group of your most significant investors.
2. Focus on key metrics
When providing updates, it’s important to focus on key metrics relevant to your business. This could include revenue growth, customer acquisition, user engagement, or product development milestones. Be sure to provide context around the metrics and explain why they’re important to the company’s success.
Presenting information in a dashboard format is most helpful for the most accessible tracking by investors.
3. Be transparent
Transparency is vital when providing updates. Be honest about the company’s challenges and what steps you’re taking to address them. This helps to build trust with your investors and shows that you’re committed to overcoming obstacles and growing the company.
4. Keep it concise
Investors are busy people, so keeping your updates concise and to the point is essential. Don’t overload them with too much information. Stick to the key metrics and milestones, and provide any additional context as necessary.
5. Invite feedback
Inviting feedback from your investors is a great way to engage with them and show that you value their input. Encourage them to ask questions or provide suggestions for improving the business. This helps identify potential issues early on and address them before they become more significant problems.
In conclusion, regular and informative investor updates are critical for building a solid relationship with your investors. By setting a regular schedule, focusing on key metrics, being transparent, keeping it concise, and inviting feedback, you can approach providing good investor updates in a way that helps to build trust, transparency, and a sense of partnership with your investors.
In contrast, if the only time your investors hear from you is when you’re coincidentally just about to raise another round of funding, they won’t have been able to connect the dots on your progress over the last year. You’ll be way less likely to get their support – monetarily or otherwise.
I say this as someone who’s sat on both sides of the table, and I wish I had done better in the past. Sometimes I didn’t want to provide an update because I didn’t think things were going great. I can see now that such an approach isn’t helpful. Being communicative and transparent in good times and bad is critical to building trust with your investors.
This Week’s Quick Hits
I watched the Tetris movie yesterday morning… I think it was released Friday night on Apple+. I found the whole story absolutely enthralling. It also brought back great memories of many a Tetris game played. In particular, I played a ton of Tetris 64 with my college roommates. In my humble opinion, this is unequivocally the best version of Tetris ever made. Have you caught the Tetris movie yet? #fortheloveofgames
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