If you think you’re sending your investors updates often enough, think again. In a survey by Zelkova Ventures, 75% of founders said they feel their investors are sufficiently updated while only about half of investors said they feel sufficiently updated. How can you as a founder better communicate with your investors? Jay Levy, Techstars mentor and MP at Zelkova VC, shares some pointers.
Table of Contents:
- About Jay and Zelkova
- How to Find Investors
- The Importance of Investor Relations
- How to Write Investor Updates
- How Often Should I Send Investor Updates?
- Tips for Quarterly Board Meeting Updates
- Why Improve Your Investor Relations?
- Investor Relations Summary
About Jay and Zelkova
Jay Levy has invested in over 90 companies with 35 successful exits since 2014. He’s won multiple entrepreneurship awards and has served as a Techstars mentor for over 10 years. His VC firm, Zelkova was founded in 2007. They’re B2B Saas focused and they’ve done 100 investments. They typically write checks between $200K and $500K with reserves of up to $1M for any one company.
How to Find Investors
Before we get into how to write investor updates, let’s first make sure you’ve secured funding! Jay’s best piece of advice for fundraising is to treat it like a sales process. Have a funnel, workflow, tech tools, and a calculated, efficient process. Look at selling equity in your company just like you would look at selling products and services.
Jay says the best way to find investors is through a mutual connection, especially another founder. An introduction from another investor is also good, and cold emails should be seen a last resort. Be warned - if you’re copying and pasting a template, make sure you always get the investor’s name right.
Fundraising platforms like Angellist (now Wellfound), Pipedrive, or Foundersuite are also good places to find investors. If you’re early in your fundraising journey and are targeting angels over VC firms, check out Inside’s guide to finding angel investors.
Finally, it is possible to find and foster relationships with investors through social media - Jay’s firm is currently investing in a company that they connected with through Twitter.
The Importance of Investor Relations
From your very first email to an investor, you’re being judged as a founder. Your interpersonal skills are important to the success of your company, and investors have preferences when selecting founders to work with. In the 400+ founders and investors Zelkova Ventures surveyed, they found that 60% of early-stage companies have 6 investors, and 13% have more than 26 investors, with syndicates counting as one. This means that as an early-stage company, you should be prepared to have a lot of investors. You need an investor relations strategy.
How to Write Investor Updates
- The time you need to spend writing an update does not need to be lengthy. Reserve 2-3 hours a month to write an update. Use the time to reflect on the past, think about the future, and be open and honest.
- Use a template that includes:
- Highlights - the good and the bad. Founders usually exclude the bad. Don’t do that. Your investors know that every day in a startup is full of challenges. Don’t be afraid to be vulnerable and ask your investors for help. If you’re trying to gauge the level of bad that is okay for an investor update email, consider including anything that wouldn’t be too damaging if it were to leak.
- KPI’s - include what’s important to you and your management team.
- Sales, marketing, product. If you have leaders in these departments, they should write these, and you as the CEO should be compiling them together.
- Work with your investors to decide what the ideal update should look like and what it needs to include.
- Have one investor review a draft before sending it to the wider network.
- Use a CRM tool like Notion, Visible, investory.io or Diolog.
- Use a captable management tool like Carta, Pulley, or Astrella.
- Find more tools at https://www.vcstack.io/.
How Often Should I Send Investor Updates?
66% of investors want updates at least monthly. They prefer text-based communication like via email, as a notion doc, or some other written form. Very few investors want updates over the phone or in person. One of the biggest messages Zelkova uncovered from the investors they surveyed was, “Don’t surprise us.”
Whether it’s good or bad news, let investors know ahead of time so they don't hear it from other sources first.
Tips for Quarterly Board Meeting Updates
- At the end of each year, set a board meeting schedule and stick to it.
- Send the materials out to investors at least a few days in advance so they can be prepared the day of the board meeting.
- If you have at least ten employees, you probably have department heads. Have those executives speak to investors about the areas of business that they lead. They should be more knowledgeable about their department than the CEO.
- Consider a plan for when investors miss a certain number of board meetings. As a founder, you deserve your investors’ attention and help. It’s okay to hold them accountable for missed meetings or calls.
Why Improve Your Investor Relations?
- Get more out of your investors.
- If you’re only getting money out of your investors, you undersold your equity. Communicate with your investors to get feedback from them about how you can improve your business.
- Informed investors are 200% more likely to reinvest.
- Investors have more money that they want to give. Keep them up to date, and that’s more likely to happen.
- Avoid trouble
- Regardless of how big or small, investors have rights, attorneys are plentiful, and lawsuits suck. Don’t go silent when you encounter a problem.
- Reflect on your business
- Updates are not just helpful to investors; they should be helpful for you and your board. Use your time writing updates to reflect on the state of your business and where you want to go in the future.
- Show appreciation for investors who trusted your idea and backed you.
Investor Relations Summary
Putting time and effort into communicating with your investors is worth the effort. Try to meet your investors in person and do a working session on product, finance, etc. When you build rapport in person early on, you’re better able to choose investors that the right fit.
Once you have your investment, develop a process for updates. What do they want in their monthly updates? If anything comes up in between those monthly updates, don’t hesitate to reach out.
As your company grows, you will need to update your investor relations strategy. For example, one of Jay’s companies that has grown greatly realized that some of their now 100 investors were not up to date. They decided to hold a 4 hour investor day over Zoom that they invited all of their investors to.
Have an investor relations process and materials, and innovate them as needed.
Connect with VCs and founders at inside.com/vc.