At Year One Labs we had 20 mentors and investors. It was (and remains) a great group. Many of them were quite active in helping our portfolio companies; many continue to help. A number of them went on to invest in the companies as well. Our system for providing mentorship to the teams wasn’t perfect (connecting 20 investors/mentors with 5 startups isn’t easy), but overall it worked.
One of the things we encouraged our companies to do is send weekly investor updates via email.
The original format for these weekly updates was as follows:
- Key Accomplishments & Lessons Learned
- Next Steps & Goals
- How You (Investors / Mentors) Can Help
Simple and concise. We designed the updates to highlight what was important, specifically learning and focus. We wanted investors to understand how well (or not) companies were executing through the Year One Labs process, and what the results were of their efforts.
Every update had a call to action for investors. This was very important: We wanted to make sure that the startups were proactively seeking help. People are busy, and even with the best intentions they can’t be of value unless provided with precise instructions and goals. That’s absolutely the responsibility of entrepreneurs – You can’t automatically expect mentors to proactively help (although they may from time to time.)
Since Year One Labs, the companies have continued to send updates. Some more regularly than others. The updates have changed over time as the companies evolve. One company includes “Recent Successes” right alongside “Recent Fails.” Humbling, for sure. But also helpful. It shows a good level of intellectual honesty, and also helps the company ask for the right kind of help.
Often vanity metrics sneak into the updates. But that’s OK. They can -at least at a surface level- help create momentum and excitement, which is important. You want your investor and mentor network talking about you, promoting you, and keeping you top-of-mind as much as possible. Graphs that are up and to the right help in that regard…
Although I stay in regular contact with the Year One Labs companies I still enjoy the updates. They’re a snapshot of what’s going on, a “re-synch” around how each company is doing and where I can step in to help. They also tend to reveal more than what’s being said in the updates themselves, which helps me identify problems or bring up subjects with the startups that are challenging but important.
Investor communication is absolutely essential. The minute you go dark, investors get scared. Worse, investors become indifferent. You’re probably not their only investment, and you’re certainly not what they stay up at night worrying about. Indifference is awful, and when it happens, you’ll feel very alone.
You need to keep investors in the loop with open, honest communication. You need to consider every investor important – even those that only invested small amounts (relative to the others.) Even someone that only put in $5k may be able to provide huge value. The same holds true for advisors and mentors (non-investor ones). Although their level of commitment may not be equal, you can only hope to maximize the value-add they provide by communicating with them. Have a process, confer with investors and mentors on how they’d like to hear from you, and do it.