As a startup CEO, you are in the business of building relationships: with employees, with customers, suppliers, and partners. But you are also building relationships with investors, coaches, and advisors who are helping you achieve your mission and goals. Oftentimes, founders fail to build these relationships because they lack a consistent rhythm of giving regular company updates.
During my time in Techstars Seattle in 2017, the importance of this concept was drilled into us: every time you meet with someone who is helping you think about your startup, you should ask if you can add them to a friends & advisors update email that you send every so often. If you made a decent connection with them, most will say, “Yes.” Having raised a round of capital from 25 investors (19 angel investors & six micro/VC funds) I have found this practice to be invaluable.
Now as an investor myself, I can see the wisdom and importance for founders to be super-communicators of a sort. They are casting vision, they are demonstrating learning and building trust with a growing network of support. Ultimately, they are building the confidence of everyone around them in their ability to lead, communicate and execute into uncertain and uncharted waters.
With that preamble, let’s dive unpack several areas of discussion on this critically important topic:
Who should receive a regular Company Update?
When you’re just starting out, it’s great to include a few people who are cheering you on in your venture. This could be family, close friends, but also anyone you think could meaningfully help you continue to build the business. As you grow the list, think of industry experts, partners, wiser businessmen, and women who can guide you, especially more experienced entrepreneurs.
As you raise a round of capital, you will likely share more detailed information with investors (specifically on revenue targets & goals, big partnerships or deals in the pipe, or other confidential information). This information might be shared at a quarterly board meeting, but monthly updates give a cadence for investors to follow.
For the larger group of friends or advisors (who are not investors), there is a wealth of information you could share about. I usually start by writing this update, and then add more details only for investors. Let’s now explore what content to include.
What information should I include in a Company Update?
The content will change based on your stage of company, but here are some pointers:
- Subject Line of the Email (The “headline”): Give a catchy headline to draw investors into reading the whole update. It’s wise to have a standard searchable title so it’s easy to look up in email search like: “VendorHawk Update [June 2021]: Pipeline is Heating Up”
- Marketing/Sales/Customers (goal vs actual): Share about leads in the sales pipeline, new customers, revenue, partners, insights or stories from happy customers. include key KPIs.
- Example: Revenue goal was $3,000 USD Monthly Recurring Revenue. Actual Revenue: $2,100 USD. We had a key deal push to next month, but it’s looking good for this week.
- Example: New Customers: Meet our new customer Saasy.com – they bought a subscription to our product on a three-year contract for $2100/month. Exciting to have their CFO bought in and the training call on the books for next week!
- Product/Service: Any developments on your product or service maturing or developing.
- Example: Received a prototype of the product back from the manufacturer, and it’s not the quality we expect. We’re still 2 weeks away from getting the next version.
- Example: We received mixed feedback on a new service and have refined it for another round of testing. Learning a lot in the process.
- Example: See the screenshot/Gif/video of the product below. Customers love it!
- Team & Impact: Notable new team members, team morale, impact in lives of employees and larger community.
- Example: We hired 2 new operations workers. Taj & Narima who are doing well in training.
- Example: Impact: We helped a team member’s family who ended up in the hospital last week, and brought them dinner. We prayed with them as well and they felt blessed by the company and our concern for them.
- Funding: Updates on fundraising round, notable new investors, or updates on cash and runway.
- We have 450,000 in hard commitments for our funding round of 650,000, including support from the AMAZING Fund. We’re really excited about their support and have room for two more strategic investors at 100K, or four at 50K.
- Prayer and/or Ask: The “Ask” is something you need help with like a connection to a specific person, or company, or resources like:
- Ask: “Does anyone know CFO Sally Jones at ABC Company?”
- Prayer: What ways can friends, advisors or investors be praying for you and your team.
Lines, Not Dots: Building Relationships with Investors
Many investors are looking to build relationships with founders they can trust. Mark Suster elaborates on the topic here for further reading. When a founder meets an investor, they are placing a dot on the grid of relational history. Every subsequent interaction that follows places another dot and begins to create a line.
Investors love investing when they see a very positive trend, but that can only happen when founders build that trend over multiple touch points of progress and relationship. Founders often neglect to build such a relationship and make a crucial mistake in fundraising: they only meet with the investor once or twice, and then ask for investment. This is like asking the investor to make a 5-10 year decision based off of 1 dot (and no trend line).
As an investor, I want to watch the entrepreneur execute and perform over a period of several months to learn about them. As I build the relationship, I’m entering into a trial period of what the next 5-10 years might be like if I worked with this entrepreneur over the long haul. Company updates are the prime vehicle for building this trust, especially as you seek to close a round of funding.
Here is what investors learn about the CEO from company updates:
- How consistent will this CEO communicate?
- How thoughtful and thorough will they be about the metrics of their business?
- How well can the company set goals and achieve them (ability to execute)
- How well can they set expectations for investors, or for their team (good leadership)
- How transparent will they be about their struggles?
- How good are they at learning from struggles, asking for help, or being coachable?
- How well do they sell to and delight their paying customers?
- How well do they inspire & build their team and leading through challenging obstacles?
All these insights about the founder help investors get comfortable about putting capital to work. This is not too dissimilar for how gambler’s bet on the performance of a horse (company) and jockey (founder) after seeing performance in previous races.
In addition to sending regular company updates, you can also build relationships by asking investors for domain-specific feedback and opinions, or checking-in with them about industry news or events. There is a wealth of information to be learned from building a relationship from an experienced advisor or investor. A proverb I really love on this topic is Proverbs 13:20, which says, “He who walks with the wise grows wise, but a companion of fools suffers harm.”
How Company Updates enormously help Entrepreneurs
Experienced leaders might be familiar with presenting quarterly business reports and the three financial statements to company boards (at a larger scale), but early-stage founders often don’t have this reporting discipline. This is why it is so critical for founders to send regular company updates early on in their business.
Here are just some of the benefits founder’s experience from sending these updates:
- Refined focus: Some metrics are more important than others. Updates help refine what you’re tracking and give you a reality check on how well you’re progressing.
- Discipline: It’s hard work to report on your business in a consistent fashion, but getting that reporting muscle built up is how founders can grow into well-spoken leaders.
- Accountability: Founders often project how they will perform into the future (five-year financial models, or even targets for next month). Reporting every month, say within the first 10 days of the new month, holds you accountable to share if you accomplished what you said you would do. Practicing honesty and transparency when you experience failure is also a benefit.
- Accelerated Learning: Sharing your insights is a great way to memorialize a lesson you learned, but also speed up your learning by asking questions of your friends, advisors or investors. When you type a “sub-par” or disappointing report, it helps you realize the urgency of getting help.
- Resources: Asking for help from your update list not only keeps you humble but unlocks the power of your network’s resources, connections, and help. Founders accel because of the depth of their whole team – not just employees, but from advisors, coaches, and investors as well.
Here are some reasons why founders don’t commit to share regular company updates:
- Ignorance: They didn’t know giving updates was a good or helpful way of building relationships and getting help. Or they think three financial statements tells the entire story, when it doesn’t.
- Fear: They don’t want to share sub-par results with investors, hiding or obfuscating the truth.
- Pride: They feel they have a handle on their business and don’t need to report on it, or don’t think they need or want help. Proverbs 16:18 says, “Pride goes before destruction, a haughty spirit before a fall.” Another good Proverbs (15:22) says, “Plans fail for lack of counsel, but with many advisors, they succeed.”
- Laziness or Excuses: They know sharing updates is a good idea, but can’t prioritize the time or discipline to write the update. “It takes too much time” they might think. But can you genuinely afford passing up the benefits we’ve discussed above?
I’d challenge you to ask a few trusted business advisors or coaches about how well you communicate about your business, your challenges, what you’re learning and see what they share. Their answer may be surprising.
A few more suggestions for sending amazing company updates:
Many friends & investors have helped me refine these updates over the years and there are definitely varying opinions on the topic. Here are some tips I would give if you’re just starting out, or trying to change your stale quarterly newsletter into a more engaging monthly company update:
- Personal Email: Assuming this email update list is limited to about 20-120 recipients, use personal email instead of a mail sending tool like MailChimp, which is impersonal and often gets caught in the promotions, junk or spam folder.
- Email Body: Do not attach the update to the email, but include it in the body of the email. Many recipients just want to read it in the email (so don’t create a barrier of opening an attachment).
- Subject Line: Use a consistent, searchable subject line for the email, but also include something that entices investors / advisors to open the email.
- Frequency: Send the email at approximately the same time every month, so recipients can expect to receive communication from you in a regular cadence, showing you to be reliable.
- Link to all past updates: Some have included a link to a google document with all past updates to help investors literally skim over the past 4, 5 or 8 updates to see the trend line in one spot.
- Product Visuals: Show screenshots, gifs or videos of new products/features you’ve finished to make it more engaging.
- Use Pictures: Include pictures of you, your team or customers, to help make the update more tangible and not just text only.
- Keep it succinct: Try to limit your words, only spending 30-45 minutes on writing the update (perhaps more like 60 if it’s an investor only update).
That’s it. I trust this overview will serve as a guideline for what a solid company update could look like.
While there are many opinions on this topic about content, frequency, and audience, my desire in writing this is for entrepreneurs to see why sending regular company updates is a critical vehicle for communication and feedback at all stages of their company.
May you go forth, write amazing company updates, and prosper.