How to Communicate with Your Investors

How to Communicate with Your Investors

Communication is key to ensuring that your startup gets the most out of its investors.

On September 21, social network company Twitter announced that it would pay US$809.5 million to settle a shareholder’s class-action lawsuit. (Read more about that here!) The lawsuit is based on the claim that Twitter was misleading its investors on how people used its platform and how much its user base was growing.

This is an eye-opening example of what can happen when a company makes mistakes in communicating with its investors. To prevent such fatal errors, particularly as a startup, here are a few tips and tricks you can follow.

Schedule Meetings

You must have a clearly defined meeting schedule. You need to plan out how many meetings you are going to have in the year and at what points in time. Eight meetings a year with gaps of five to six weeks between meetings is a great way to keep your investors filled in on all the important news about your company.

American entrepreneur Mark Sustser recommends creating spreadsheets of all your company’s business prospects and companies that you would like to connect with. You can then encourage investors to fill out this spreadsheet with their contacts in the respective companies. This will help you keep your investors in the loop even before meetings. You can then use this information to have a more time-efficient board meeting.

Maintain a social media presence

A healthy social media presence reflects that the company is doing well. For businesses targeted towards consumers (B2C), being active on social media is an absolute must. This makes the company more accessible to consumers.

Not only will the active engagement on social media help you reach out to potential customers, but it will also give you a platform to share positive customer feedback. Creating a positive image around your company will help you keep your investors happy. 

Another advantage of social media use is that it can help you quickly address any controversies or bad press you might be getting. For instance, when the Wall Street Journal recently released its series of investigative reports on Facebook, the company’s communications director Andy Stone quickly took to Twitter to dispel any misconceptions about the company’s policies. Doing so could help you resolve any doubts an investor might have about your company’s image.

Be careful when sharing timelines

Timelines are a tricky subject when it comes to entrepreneurial projects. Often, you might think that your company is all set to finish a project within a stipulated time. However, you might end up being unable to do so. 

While your first instinct in this scenario might be to simply not inform the investors of your timeline, doing so could make the investors doubt the profitability of your company.To avoid misleading investors with your timelines, entrepreneur Linda Thrasher shares that you must mention broad timelines with the emphasis that it is only an estimate.

Answering all their questions

You need to be thorough in answering any questions that your investors might have. It is important to remember that these questions stem from an interest in the success of your company. Their questions will also help you streamline your ideas.

The process of communication goes both ways. Thus, you must try to make sure that you use the advice from your investors to take your business to greater heights. Most venture capitalists want to help the companies in their portfolios. So you must make sure that you use the opportunities your investors bring to the table.

Header image courtesy of Unsplash 

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