33. Investor Relations


Grapevines are for grapes…

Once you have raised money, you have one more responsibility: communicating with your investors. Whether they sit on your board or not, they are your business partners, and they deserve to be kept up to date on the progress of your company.

Legally, as minority shareholders, they might not have the right to see detailed financial statements. Share them anyway. The investors gave you money to help grow your company, so show them in detail how the money is being spent and how it is turning into revenues. Among other things, this helps build trust, which you will need later on.

Set up a routine where you send a monthly update. At the start or end of every month, send at least a half-page email to all your investors, all at once, with the news from the previous month. Be honest and open about both the good news and bad news. And if there is any exceedingly bad news between newsletters, don’t wait. Send a special update as soon as you can. Good news can wait. Bad news can’t.

You may feel that all such communications are distracting from operating your business. That is true. However, again note that your investors are your partners. They trusted you with their money, and you can help keep that trust by communicating.

In the long run, this has two benefits. First, when you need more money, even if you’ve not hit all your milestones, your investors will at least know you well, and that can lead to bridge loans and follow-on investments. If you have done what you promised, then they’ll already know that fact, already trust your abilities, and your fundraising will be far easier.

Secondly, someday you may start another startup. And again, win or lose with this startup, fundraising is about relationships, and relationships are based on communications.


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