I don't want to sound overly dramatic, but it's a fact that most of the mistakes you make when doing business cost you money. And it's one thing to track your runway, but it's quite another to be left without the next round because you ruined the impression of yourself for investors by sending an update that says nothing. By the end of this article, you will have a good understanding of how to avoid sneaky, common mistakes when writing updates.
Don't lie to your investors
Don't lie in your investor update - it will only hurt your credibility. Be honest about the company's performance and any weaknesses you may have. And if you are not sure how to fix a problem, ask for help and don't try to cover it up.
It is important for investors to know about the company's progress and not just be told what they want to hear. This way, they can help provide feedback and advice on improving certain aspects of the business.
Don't hesitate to ask for help
By asking for help, you show that you are willing to work with your investors to improve your business. Most investors have many connections in government, media, and industry experts. This will go a long way in building a strong relationship with your investors. But always be specific in your requests! Not just "We'd love intros to companies with >1000 people," but "We'd love any intros to VPs of Marketing at companies with >1000 employees in North America in the entertainment industry."
Don't forget to proofread your update
When writing your investor update, be sure to proofread your work carefully. Typos and grammatical errors can give your company a bad reputation and may discourage current and potential investors from willing to work with you. By taking the time to proofread your update, you can avoid these problems. Also, you may use QuilBot and Grammarly to check your grammar and typo.
Don't make your investors worry about their money invested: it will not end well. The main point – make a habit of yours to send an update with a certain frequency, e.g., always send on the 30th.
Some investors prefer to receive quarterly updates, but usually, that won't apply to startups. Most investors prefer monthly updates, in some cases – even weekly..
Stick to a format
A simple email is OK. You can send your updates using whatever format that works best for you, but be sure to pick one and stick with it. If you're sending plain-text updates – that's fine, don't switch back and forth to different formats every month. A template for updates that maintains consistency for your investors can help them process your data faster, save time, and look more professional.
Don't change metrics over time
Limit the number of figures to one key metric you are working on improving, and measure success by that number. Make a list of the most critical metrics, and keep it the same over time! Investors often have their reports; they track your progress for a certain period and conclude whether they made the right choice. If you constantly change the metrics you include, you make a huge mess and give yourself a great disservice.
On the other end, there's a portfolio manager, who's reading your updates and extracting your data every single month to give the board of investors the full picture of your company at a quarterly meeting. Think about what that person is going through when you're sending plain text, then an html, then a pdf, then a link to your google sheets, etc.
Just pick whatever works for you and stick to it.
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