Keep your investors informed

The most underrated skill a startup CEO needs is keeping investors updated, excited and engaged. Too often, all that’s required to build the company overwhelms CEOs of startups, and they forget to include regular communication with their investors.

This is an easy task that can be integrated into a quarterly schedule, which can even coincide with the preparations for quarterly board meetings to become second nature.

Why make the effort

The most important reason to keep investors informed is to continue to capture their hearts and minds. This helps keep them connected to the company and maintains their interest and excitement. The more engaged the investors are, the more likely they will write another check the next time capital is needed.

Also, many investors can add significant value to portfolio companies. Investors can provide important advice and expertise. It is easier for them to do this if they’re updated on the progress, goals and challenges of the company.

This is valuable because startup companies cannot afford to lose time or money. The assistance of a good mentor or adviser may potentially keep the company from losing precious resources on a major mistake.

Follow this formula

A simple formula for providing meaningful information to investors generally includes three key elements: 1) a narrative about the company’s progress and goals, 2) a dashboard of key non-financial metrics and 3) financial statements.

The narrative should describe the progress of the company to date and the goals for the next quarter. It should maintain a strategic perspective without delving into too many details (simple and to the point).

This is where the CEO describes important updates to the technology, key sales accomplishments, issues with costs and controls, and changes in staffing. This also provides an opportunity to ask for assistance, to ask for introductions or to ask for contacts with specific expertise.

The dashboard includes KPIs or key performance indicators. Typically, but not exclusively, these are non-financial metrics, such as number of customers or orders, sales pipeline, downloads or registrations, total active users, etc.

These indicators will vary based on the type of company; obviously, the metrics for a medical device company differ from an internet company. Some examples for a medical company would include results from clinical tests, research publications, additional intellectual property or regulatory approval notices.

Finally, the latest financial statements are included. Quarterly updates can be generated internally; however, it’s a good practice to have an audited set of financial statements for the year-end update. These financial statements should include a balance sheet, income statement and statement of cash flows.

It’s a good practice to display financial trends — you can demonstrate this by comparison to a budget and/or to prior period actual statements. Including pro forma statements for the upcoming quarter or year can also be valuable, depending on how you wish to display the business pipeline.

By providing regular updates, founders provide the opportunity for engaged investors to promote the company to other investors, key customers, key advisers and potential employees.


Catherine V. Mott is the CEO and founder of BlueTree Capital Group, BlueTree Venture Fund and BlueTree Allied Angels located in Western Pennsylvania.