One of the biggest mistakes a startup can make after working tirelessly to raise funding from investors is ceasing to nurture the relationship with the investors after receiving the funds. Investors provide funding to startup companies and expect the money to be put to work to generate a return as soon as possible. You must keep the investors informed of how the funds are being used and what level of progress is being made on the future of the startup.
It is important to remember that while the investors have a certain level of confidence in you, they also want to make sure the funds being offered are not wasted. The investor has an active interest in your profitability, so you must show you understand that by providing updates to them regularly.
Important information to share in your investor updates
In addition to providing updates regularly, the updates must be delivered in a manner that shows your business is organized, transparent, and responsible.
First, you want to think about what your most important numbers are that reflect the current progress of your business and make sure those are provided first. Investors will expect you to be providing your KPIs, which are your business’s key performance indicators. Do not just focus on one key indicator but provide at least 3 to 5 different metrics that relate to your business profits, progress, and customer interaction. These numbers need to be provided to the investors clearly and concisely.
Also, pull specific numbers that show your new customers, and your returning customers as both of these categories show your business has something to offer that people need and want.
Another important topic to cover in your regular updates is any new products or services that you will be offering in the future. Also, share with your investors any new ideas that are coming down the research or production pipeline.
Finally, you will cover anything exciting going on at your business that may not be reflected in the metrics you have provided in the report. For example, if you recently made a hire that the company is excited about, or there has been a positive press release, or if you are launching a new marketing strategy.
Handling the bad news
One mistake startups make is that they stop communicating with investors when the news is bad. If you have bad news, you must be communicating with your investors asap. Investors are experienced when businesses hit stumbling blocks, so reach out to them with any issues. There is an excellent chance they can help you overcome the problems and get back on track. Remember, they have a financial interest in your success!
Unless the investors ask you to communicate in a certain way, you can communicate this information anyway that will give them an honest and clear insight into the business.
To maintain a strong relationship with the investors do not hesitate to pick up the phone to deliver some good news. If there is an important meeting scheduled to discuss an exciting product idea, then you may want to extend an invitation for them to sit in.
Investors depend on you to complete the plan that you presented to them for the basis of the funding. If at any point you think those plans need to be adjusted, you need to let your investors know asap. Any significant changes should be brought to their attention as failure to do so could limit your ability to raise funds in the future.