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Our company appears to be close to getting our first investment -- term sheet but no cash delivered -- and we know we need to get in the habit of keeping this investor and any future ones up to date on the project with news good and bad. What is the best format? any examples? Are there any issues with using email to do these informal updates? Do we need to include some form of disclaimer? Is a weekly update reasonable or does it need to be less often? Any thoughts much appreciated. |
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Good and consistent investor relationship is critical. There are several elements of investor relationships. Investor relations is far more than sending our a quarterly piece of formal communications. Investor relations is building, cultivating, and investing in a mutually beneficial relationship. Investors are part of your company's community. Investors are your Partners Investors are your business partners. They have put their money to work in your business. You are accountable to them to judiciously use their money to increase the value of your business. The bottom line is that what will keep them happy is an increased value of your business -- and thus their investment. To that ends what you need to communicate with them is the good news, the bad news, and the tracking metrics the demonstrate the movement along your business plan. Good News Include investors on your press list. Call them before the news hits of a "big win" Include them on the "key supports" list to receive critical break through information. Make sure if they are twitter followers, or Google_ circle readers that they are following/reading you! You never want them to feel out of the loop. You never want them to have the experience where your investor learns on the golf course you just secured a contract with Microsoft. Bad News Bad news will happen. It's a startup. It is part of the journey. The investors knows that. Nothing will build their trust and your social capital with them, like open and transparent communication of bad news too. You don't want them to learn on the gold course that the company they invested in just lost a contract with Microsoft either. Official Shareholder Written Communications Factual. Simply. Clear. Regular. And approved by counsel. Part of the investor relationship platform -- not the be all. Don't Stop at Written Conference calls, webinars, direct calls, meetings. There are lots of means and modes to communicate -- to establish and build your relationship. Investors are Unique Each investor is unque. There is a "personality" of the money for the business. Some want to talk once a week. Others want a report once a quarter. Some want to ask questions, some will read -- others just want to know the communication channel is open. Don't push everyone into the same box. Engage Investors for more than Money Many investors are also wise, experienced, skilled with great networks. You received not only their money-- but their attention. Respect their valuable time, but nothing keeps someone engaged like not only being solicited for advice -- but the entrepreneur that actually considers and takes the advice. this too is part of health investor relations. *Legal Requirements* Last but not least -- don't forget the legal requirements. If you owe a year end K1 -- you better have it out on time. Don't ever let the little things get in the way -- take care of them on time. . |
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It very much depends on the terms you agree with the investor. And even then it can be a bit of a balancing act! It sounds like your investor is a pure financial investor (if they were planning on being more active, then I suspect they would have already dictated to you what they wanted), so I'll answer on that basis. Firstly, I would keep it formal. Have a standard set of information, in a standard format, that you send at a regular time. There is always the risk with e-mail that you can drift into informality and divulge too much information. Too much information? Investors are not in the business day-to-day, so whilst you must be honest with them, you need to provide them with the full context behind anything. For example, you are better telling them at the end of the month that you have won 10 contracts against a forecast of 8, as apposed to telling them on 20 days in the month you have not won anything! Agree up front what you are going to provide and stick to it - it can always be revised and amended later. Can't give you specific examples without knowing Monthly would be more standard than weekly for reporting to a pure financial investor - again, a week is usually not enough context to give a true picture of progress. That said, monthly reporting shouldn't mean that you don't inform them in-between should anything significant happen. The key to happy investor relations is consistency communication. Rich |
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