A key skill among good CEOs is communicating well with their investors. Just like a marriage or any relationship, bad communications breeds bad results and good communication can enable a relationship to survive almost anything. Regardless of the direction a company is heading (in a fast car to IPO or bankruptcy), good communication with investors only benefits the CEO and the investors.
I recommend that CEOs develop a format that they can update at least 4 times per annum if not every two months or every six weeks and send out this email blast to their investors. Hitting the send button once can update 3, 5 or 50 investors and that single email update can be the “apple a day that keeps the doctor away”.
If investors don’t hear from you and you go bankrupt they may be annoyed that had you communicated with them along the way they might have been able to become involved and save the day. If investors don’t hear from you and you IPO after completing 5 financing rounds they may be annoyed that had you communicated with them along the way they might have participated in each financing round and brought in some of their strategic buddies to help the company advance faster and further. Either way, investors like to know what’s going on. Investors like me need to provide good detailed reporting to the investors in our fund and we want to to help our portfolio companies as much as possible and leverage our networks. We need information and updates so that we can help. I had lunch with a portfolio CEO today in San Francisco and I made 12 introductions a few hours later helping him with investors, customers and partners. Without communication I would not have known how to reach into my network and help.
I have come up with a rough template for a reporting document CEOs can customize to their own business. Every business is different so some will focus on the number of users, number of Tweets, etc. Others will focus on the number of bank accounts and dollar volume in each account, number of game plays, etc. Although we are all unique beings, here are some building blocks that can be considered for inclusion in your next investor update report.
A catch 22 is that the report will be too long for some investors and not detailed enough for some. My advice is that less is more. Make it as short as possible; so cross out as much of my template as you can to keep it brief.
You can download a Microsoft Word version of the doc here. Rubicon Venture Capital (Georgetown Angels) Quarterly Investor Reporting Form
Now this is for communication with a pool of investors. How to communicate with your board of directors is another topic entirely. I have an entire chapter about managing your board in my book. One point to make on that is to work the telephone and speak with all of your board members frequently and make sure there are no surprises at board meetings. Get the votes via phone before any vote happens in a board meeting. Imagine Kevin Spacey taking names before anything goes to a vote on Capital Hill!