I really get upset when weeks go on and I don’t get any news from some of the startups in which I have invested. In the case of publicly-traded stocks, I can find out the market cap almost every minute, get quarterly reports and follow discussions with the management for those companies that hold investors’ calls.
When it gets to startups, a few of them provide regular updates. Some founders only get back to you when they are running out of money or even worse, when the major crisis or bankruptcy is looming or irreversible. Why??? – What benefit do you get from keeping your shareholders and investors in the dark? Even if you are not making much progress, they will eventually find out.
I understand that reporting takes time and that the founders’ priority is growth, but by neglecting to communicate regularly with your investors, paradoxically you may be missing some opportunities to accelerate growth.
What I (and probably all investors ) want from you:
- No bullshit communication, straight and to the point.
- Provide a few KPIs – Trends – Goals – Highlights and Low-lights. Asks.
- Do it every month, on a rigid schedule.
Here is a model form from the Founder Institute and another one from Visible.VC
Information rights are not very frequently considered in pre-Series A shareholders agreements since there is a scarce chance to enforce them, nevertheless, I am considering starting to insist on their inclusion as a condition for investment, at least as a system for the self-identification of the “bad apples”.
Effective communication is 20% what you know and 80% how you feel about what you know.Jim Rohn