By Jessica Droste Yagan
Many entrepreneurs don’t prioritize communicating with their investors… and that’s a mistake. At Impact Engine, we know how important the investor-entrepreneur relationship is. We have our own investors in our fund, dozens of investments in portfolio companies, and have supported many entrepreneurs in managing relationships with their other investors. We also know that when investors are out of the loop, they can get disengaged or frustrated. When something inevitably goes wrong in your business, investors will be more skeptical about your ability to handle it, and less likely to re-invest. On the upside, when investors are in the loop and engaged, they can add a lot more value. Many investors will go out of their way to help if they know what you need.
We’ve observed some best practices in investor communications that we thought would be valuable to share. If you’re an investor, you could share this with CEOs that may not be communicating well. If you’re an entrepreneur, we hope you can take something valuable from this and use it to your advantage.
Err on the side of transparency (at a high level).
While there really are no rules about what should be included in an investor update, there are definitely some key pieces of information that you should be communicating. First, always include the quantitative metrics that actually drive your business. Information like bookings, revenues, customer engagement, and customer retention (depending on your business) are required. Generally, there’s no need to include level of cash flow and runway with those outside of your board, but you should give investors a heads up if you will need to […]