Why your investor updates will not be working

When you’re a founder who sends month-to-month or quarterly investor updates, I’ve some uncomfortable information.

They in all probability aren’t being learn in depth, and your buyers don’t care deeply about them.

I don’t imply they’re skimming them whereas checking electronic mail. I imply they’re genuinely not retaining something of worth from the fastidiously curated bullet factors and graphs you spent hours crafting.

Founders ship updates as a result of we have now all been advised the identical factor.

 “One of the best founders I do know ship common investor updates”. 

You’ve heard it a thousand occasions, and also you wish to be seen as founder, so that you comply with the recommendation and also you blast your investor checklist as soon as a month.

Is it true that the very best founders ship updates? Effectively Chronosphere, one in every of Australia’s most spectacular exits in current reminiscence, despatched precisely one investor replace throughout six years earlier than promoting to Palo Alto Networks for US$3.35 billion. One replace. Six years. Billion-dollar exit.

I’m not suggesting there’s causation right here, or that you need to cease sending updates altogether. Common communication does serve a objective. However I’m suggesting that you need to cease sending out the performative nonsense you might be at present sending, and assume extra deeply concerning the objective of the replace.

Why are they so unhealthy?

As a result of they aren’t trustworthy, and the founder writing them has not stopped to ask “why am I doing this”?

Don’t be performative

Let’s begin with honesty. The connection between a founder and an investor is a fragile one. You need them to imagine in you and the corporate in order that they are going to proceed to fund the capital wants of the enterprise. In the event that they cease believing, the funds dry up and you might be compelled to outlive on revenues, run for the exits or discover different buyers. 

In response, you write performative investor updates. You concentrate on highlighting the whole lot that went effectively, cherry-picking the information to make it sound like issues are shifting in the proper route. However startups are exhausting, and infrequently nothing goes effectively, so that you cover it behind double-speak and optimism theatre. The VC will get the information they want for their very own reporting methods. Everybody nods alongside. Job achieved.

Besides nothing significant occurred. No belief was constructed. No insights had been gained. Nobody’s decision-making improved.

Over time, I believe this association undermines belief. You assume you’re “promoting the dream” every month, defending your relationship with buyers by sustaining confidence. In actuality, you’re coaching them to disregard your updates. You’re creating an surroundings the place buyers know there’s little sign in your noise.

As a founder, you haven’t stopped to assume why writing an everyday replace is helpful. You comply with the template your lead VC offered as a result of that’s what “good founders” do. The template captures the administration info knowledge factors the VC wants. Everybody’s checking bins, however nobody’s thought of whether or not this serves the corporate’s pursuits.

If knowledge assortment had been the one objective, you would merely give your buyers entry to your administration dashboard or a shared knowledge room. Drawback solved. So if the replace isn’t primarily about monetary info, what’s it for?

Exhibit clear pondering

Probably the most priceless investor updates I’ve learn are written by CEOs who use them as an train in clear pondering.

To replicate. To look at the enterprise in its entirety after which put down into phrases what they really assume. Many of the advantage of the month-to-month replace occurs earlier than you even put pen to paper, since you are compelled to ask your self some key questions:

Are we headed in the proper route?

Do we have now the proper individuals in the proper roles?

Is the traction we’re seeing real product-market match, or simply early adopter enthusiasm?

What wants to alter and the way shortly?

This reflection is the place the worth lies. It’s your probability to cease operating and simply sit with the enterprise. Interrogate all of your assumptions and beliefs in opposition to the precise knowledge earlier than you spend the subsequent month repeating the identical shit you probably did final month.

When you’ve achieved the exhausting work of trustworthy reflection, write as for those who’re speaking to a trusted advisor, not performing for a board deck. Write as in case you are a human. 

Be trustworthy

Be intellectually trustworthy. When you’re unsure whether or not your current person progress represents product-market match or simply early adopter enthusiasm, say that. Articulate your speculation and what proof would show or disprove it. Share the questions you’re wrestling with, not simply the metrics that look good.

Body challenges as you really see them. Your buyers are good individuals who’ve seen many firms succeed and fail. They’ll deal with the reality.

In case your investor updates really feel like a chore otherwise you dread writing them, then you definately’re doing it unsuitable. They need to be priceless to you first, no matter whether or not anybody reads them.

Write truthfully about what you might be seeing from a spot of reflection. Your buyers will respect the candour, and also you’ll have a greater probability of constructing a terrific firm.