If a founder sends one email this month, it should be the easily-digestible, transparent, data-rich retrospective a founder circulates to each of his or her individual investors. The almighty monthly update communicates what happened and has the potential to predict a startup’s ultimate fate.
Part of my job at The Startup Factory
is to keep tabs on the health of our portfolio companies. It’s part and parcel of knowing when I can help plug them into our network of angels & VCs when they want funding. More importantly for the early stage when we invest, it lets me know when to dig in.
wrote, “If your startup isn’t sending updates, it’s going out of business.” (Read his whole exegesis on the importance of writing investor updates here
After 18 months of watching this dynamic play out, it’s clear to me that Jason is right. Categorically, I hear from the ones who are doing well, not so much from the ones who aren’t. The ones that write share the good news and ask directly for help with the challenges they face. The ones who could probably benefit from some outside brains go radio silent.
And that’s a dang shame.
First, I can’t help with something I don’t know about. I have the keys to the CRM, and I’m ready to use them. The great good of having a network of more experienced people is allowing them to help you avoid the usual mistakes. The least you can do is enlist them to go out there and make more interesting ones.
Second, I work for all of TSF’s portfolio companies. Their success is directly tied to how well we do. That’s how basic venture math works. I’m incentivized (and personally motivated by our awesome entrepreneurs) to do everything in my power to help them with the snags.
Third, chasing people around to ask how they’re doing is a giant time sink—so much so that a few companies have pitched me on SaaS products that automate monthly updates. I’ve been sorely tempted.
And yes, I get it. This requires some hard mental work.
Going silent could be a reptile brain thing, the unconscious part of us that helped our earliest ancestors avoid danger and take over the world. We’ve evolved since then, and there’s a fair argument that being a good entrepreneur means defeating your reptilian instincts on a daily basis.
Sure, there’s the feeling of letting an investor down if the news isn’t glowing. That social element is real, but again, those same people picked you, and given the chance and your personal grit, they’ll pick you again. The entrepreneurs who will have the hard conversations not only get more help, but they also endear themselves to their investors.
Email your investors. They think about you often and wish you’d call. We’re not your parents, but we do want what’s best for you.