Q: Why should I bother sending investor update emails?

A: Because they can be effective

Let’s break it down.

Who do you send them to?

All high-potential investors. This includes new groups or current investors that are able to follow on or lead future rounds.

What do you send?

In the context of this piece, let’s assume that you’re sending one email to two distinct audiences. Current investors may appreciate more detailed information and are more likely to look for ways to be helpful. Potential investors skim for KPIs and interesting developments. It’s important to cater to both of these groups and make it easy for them to pull the data that they need quickly. After all, most investors are likely getting dozens of these.

How do you do it?

An organized and well formatted email goes a long way. Gmail can be challenging in this department – even if you’re composing in Outlook or anther editor, you should prepare for recipients using gmail (a majority of VCs do). I suggest copy and pasting in all tables and charts as images. You can also craft emails in Word or anther editor and paste the entire message into gmail before sending, which can make things like highlighting or emphasizing easier.

Whatever you do, don’t end up with an email that looks like this:

 

It’s scary to read and I won’t even attempt it. Contrast this to another email I have received (I removed charts and tables for an apples to apples comparison):

 

Among other things, notice the quick intro and bullets at the top of the email. This is extremely helpful in giving readers a good idea of recent progress and other updates, and a preview of what’s to come in the remainder of the email. Also notice the use of formatting to break the email into consumable chunks.

There are many other posts out there on what data to include so I won’t go in detail (OpenView, Update My VC by RRE Ventures, and even Huffington Post have helpful templates).

When? How often?

Weekly is way too much. You want to stay top of mind but also how meaningful progress between updates (Trigger the “Woah! They’ve got $2M ARR already?!” reactions and not the “Seriously, they’re still at $2M? “). Somewhere between monthly and quarterly is a safe bet. Keeping a regular cadence locks it in.

Where?

No matter how progressive they are, VC’s can’t easily copy and paste or refer back to Snapchat stories. LinkedIn has no formatting. Tweetstorms can get annoying. So I guess stick with email. Although I wonder how Slack could turn out.

Why?

So this is the meat of it. The top three reasons

3. Impose the mere-exposure effect. People like things that they see over and over again. As long as your updates are generally positive, show progress and personality, I’m going to start to like you. I’m going to feel like I know you. To be honest, I don’t know how much this influences investment decisions, but when I get updates on the reg, I do want to help those folks. Which brings me to my next point:

2. Ask for help. Current investors want to help you. Future investors appreciate the clarity and transparency. Its a good judge of maturity and how good or bad things are. Oh and last but not least, you should get some offers to help (which is the real goal).

1. Prompt the, “want to meet?” emails. Whether it’s reminding VCs that you’re around and plugging away, that you’ve just hit their “strike zone” or typical metrics thresholds, or that you’re about to start raising, you want the “RE: Startup Update – January 1, 2020” to be something like this, “Great to hear things are going well, I’d love to get a chance to hear more. Friday?”

P.S. Sending off-schedule action emails

Since these update emails serve many purposes – to inform, ask for help, give credit, motivate folks, etc. – key messages can get lost in the noise. Occasionally, you may want to send event-based emails, such as those asking for help (e.g. key hires, specific customer intros, to announce an event) or celebrating a big win.

P.P.S. Sending one-off emails

There’s a 90% chance you’ll hear no response from mass emails. There’s a 99% chance I’ll respond to personal emails (e.g. “Hi Jackie – wanted to update you. See below”). It’s a trade-off between time and potential return (and be aware of mail-merge failures).

What results have you experienced with investor communications?

Q: How does a first pitch to a VC end?

A: With a “No” or “$$$!”

(and everything in between)

I’ve had a few entrepreneurs ask me how quickly we decide to move forward working with a company. Do we huddle up after every meeting to discuss? Do we check companies off on the Monday meeting? Is it more of an individual thing or a group process? (More on that later.) Essentially, all of these questions drive at understanding what happens after that 30-60 min. first meeting.

There are a range of options. I’ve bucketed them into a few categories based on my experience, ranging from worst (lowest likelihood for an investment) to best (expect the term sheet this month). In most cases, whoever you’re meeting will identify next steps during the meeting. If they don’t, you should ask.

“No.”

Full stop. Comes when your company is not within our focus (product, industry, market, technology, stage – too late, geography, etc.) or we may have invested in a competitor.

When you receive this answer, you should figure out why. If it’s cut and dry, for example, you’re a biotech company pitching a software VC, move on and focus on investors that are a better fit. If there is something else the investors are seeing, for example, a broken business model, try to flush it out. Its very low risk (the VC has already said no) and you may be able to identify other risks, learn about new opportunities, intros to other investors, and so forth.

“No, but just for now.”

This is a legitimate answer if you are either too early for the VC or you are not fundraising at the time of the conversation.

You can tell if the VC is interested if they ask for your investor updates (mildly interested), that you reconnect when you begin fundraising (more interested), or to put an update meeting on the calendar in 3-6 months, even if you’re not planning a raise (really interested).

Make sure to follow up on these actions. The more data points you have on how the VC acts, and the VC has on how you perform, the better.

“Let me get back to you after we discuss on Monday.”

Some say this is a cop out for not being able to say “no” in person. In other cases, the person you’re meeting with just might not be sure what the next step should be. For example, if I’m meet with a marketing company am just not sure of how interesting their product is, I’m going to consult with one of the partners that knows the ins-and-outs of marketing tech. If he’s interested, we’ll set up another meeting to get him up to speed. If he’s not, I’ll take his word for it.

The problem with this response is that, as an entrepreneur, you probably don’t exactly know where you stand. The upside is that you should only wait a week for a clear answer.

“Are you free next week?”

Great outcome. This means the VC would like to give more of their team the opportunity to meet with you and hear your story.

The (small) downside? Another 30-60 min. that could end with any of the options already outlined.

Tip for the next meeting: if there are new people in attendance, start from the top, but accelerate the pace. It’s likely that they’ve been briefed or read notes from the first meeting, but no one tells your story like you do.

And… very rarely… “We’re in.”

Note: this never comes from an associate and never with companies later than seed stage.

In it’s most basic form…

Aside from everything else that’s going on in that first pitch meeting, you’re trying to figure out where you stand so you can minimize the time you spend on VCs that aren’t going to invest and maximize your potential with the VCs that may. If it’s going to be a “no,” get there quickly, but try to get the most value out of the interaction – be it introductions, feedback, or advice. Then, follow up, keep folks updated, and see if those “maybes” can be nurtured into “yeses.”

What else should VCs be doing to make the process less painful, more transparent?