There’s no point mincing words: most venture capital investors are constantly evaluating and ranking the companies in their portfolio.
In a tough funding environment — like the one we’re headed into — only the top bracket of companies will get funded.
It’s more important than ever for founders to use every touchpoint they have with investors to signal they have what it takes to steer and grow a large business during a downturn.
Providing excellent written monthly updates is a great way to build investors’ confidence. Here are six tips that will likely put you in the top 10% of investor comms.
Send your monthly update within 3 days of the month ending. If that’s not possible (e.g. because finance needs time to reconcile the books), telegraph exactly when investors should expect their update. Never miss an update.
At the top of the update, report all your north star metrics. The more quantitative the better. Don’t be evasive of standard metrics: revenue, number of active users, ARPU, CAC, churn, LTV, cash burn, runway. If you have specific metrics you track (e.g. day 30 retention, WAUs / MAUs), explain why they matter to you and then report them on them consistently. Also give investors context on what these metrics mean – show trend lines, not points in time.
Show that you understand your metrics relative to relevant companies in your industry; signal you understand what good looks like.
Give investors plenty of forewarning if you anticipate there might be an upcoming hiccup (e.g. large enterprise contract at risk, product development delayed). There shouldn’t be many surprises for missing targets or not launching when you said you would.
Being recognised in publications and industry awards is awesome, but they’re generally lagging indicators, and they rarely move the needle on the core business. It’s great to celebrate these kind of wins, but they probably shouldn’t be in the core section of your update.
Don’t ask for ‘someone in marketing we could chat to’, ask for ‘someone who’s worked in the performance marketing function at a $10m – $50m annual revenue D2C company that we could have a 30 minute conversation with about scaling our advertising budget 5x over the next 12 months’.
Jessy Wu is a venture capital investor at AfterWork Ventures, a pre-seed and seed stage funds that invests in tech and tech enabled startups. This is an expanded version of an article that first appeared on LinkedIn.
Jessy Wu is a former VC and the founder and managing director of Encour — a strategic communications agency emboldening clients to command the narrative.
