It’s important to have an open communication channel to keep your investors informed. Maintaining long-term relationships with your investors is one of the most important parts of maximizing the added value that strategic investors can provide to your business. The communications are best delivered in writing, either through mail or e-mail.
Many early-stage companies choose to provide investor updates on either a monthly or quarterly basis. These periodic updates usually include information about key metrics, traction, and any business issues that have arisen. This update can include links to new articles about the business, information about new partners, team members, opportunities, etc. You also want to notify investors about any current and upcoming issues that the company may face, particularly those that relate to fiduciary duty and organizational impact.
Finance Related Updates
You should always notify your existing investors of a new financing round. Your investor agreements may also legally require you to do so when future capital rounds take place. Some investors from previous rounds may also have the legal right to participate in new rounds of capital raising. Maintaining good records of each investor’s holdings and contact details is vital for companies that are raising multiple rounds of capital. When you receive offers to acquire the business, the terms of your investor agreement may require you to notify the investors of any such offers.
The monthly report you send to investors shouldn’t be longer than a page or two and can include P&L information. A more substantial quarterly report should include detailed financial information.
Depending on the level of involvement of the investor, phone calls and in-person meetings can be beneficial too. Consider scheduling semi-annual meetings or brainstorming sessions with investors, either in person or via conference call.
Why Are Investor Relations important?
- It forces you to be accountable to yourself and to investors.
- It encourages ongoing evaluation of your company and business model on a monthly and/or quarterly basis.
- It helps investor identify potential areas of growth, partnerships, or new business angels.
- A record of strong investor communication and a documented history of the company’s performance can help attract new investors.
- Investor relations and reporting are important infrastructure components for larger companies and you should start developing this infrastructure early.