Over the last seven years I have made several angel investments - all of them at a seed stage. A couple I have been intimately involved with as a board member but most of them I’m just a passive investor that from time to time will meet with the CEO/founder and offer some advice.
Two things are clear for me as I reflect on my experience: 1) 2 in 10 will probably pay out - the rest will just go away and 2) the two that will pay out have great communicators as CEOs.
Being a great communicator doesn’t make you a good CEO - but good CEOs know how to communicate. They not only know what to say but also know the rhythm of communications.
A good rhythm of communications in my world has three key ingredients - frequency, data and analysis.
Frequency: Be a clock - predictable. As an investor I want to be kept up to date on what’s happening with the company. As a CEO the last thing I want is someone to ask my investor, “How’s ACME doing?” and they reply with “I don’t know I haven’t heard from them in a while.” Investors are some of your best spokespeople - you should update them frequently - once a month is a good rhythm plus any special events. A simple email will work - maybe a face to face every few to six months. As the company matures once a quarter or twice a year is fine especially if they have a formal board. Bottom line - be consistent - don’t provide info one month then skip three - then it just feels like something is wrong. Set a reminder on your calendar. If not much has changed - then the email is short and sweet - but it isn’t absent.
Data: Just the facts. Investors want the key info on the business. As a CEO I want my investors to have the info to understand the current dynamics of the business. Regardless of stage - state the cash position, burn rate / profit, status of fund raising activities (if any), sales, key metrics etc... Bullet points and tables work great. Don’t make folks hunt for the pulse of the business, it should be front and center. Use attachments for details if that is necessary.
Analysis: Under promise and over deliver. This is the narrative section. This is where I as a CEO tell the story of the business through my eyes. I try to communicate the good and the bad but really try to avoid extreme happy or sad. I want to be perceived as an optimistic realist that is in control of the key issues of the day. As an investor I like to see CEO reflect on the goals of the business and the steps he/she is taking to get there.
In the end establishing a rhythm of communications forces you to pause and account for your activity back to your investors. It is a time to reflect and perhaps self assess your progress. If you are writing the update and say to yourself, “Geez I haven’t done much these last 30 days” then its time to kick it into high gear. If you never update your investors (blogs don’t count they lack lots of vital info) - you’re losing an opportunity to get more champions to sing your praise and you are holding yourself accountable to no one. If you rely on simply responding to inbound requests for info - you’re making the job 10x harder than it should be and you are letting the investor plan your day. Get in rhythm.
