NFX: A Founder’s Guide to Crafting Compelling Investor Updates in Tough Times

• An exceptional founder can often be identified by their communication rituals, which are evident in their interactions with their teams, customers, and investors. Learning to send world-class investor updates is one of the most valuable rituals that can be adopted.
  • Effective communication is crucial because the right investors can be powerful allies, but only if trust is built through clear communication during good times and even more so during challenging times. Therefore, mastering the art of communication can greatly benefit a founder's success.
• In late March 2023, NFX surveyed 870+ founders in our broader network (not necessarily NFX portfolio companies) to find out how they were doing after the SVB banking crisis, and in the downturn more generally. That data reveals the communication habits of seed-stage founders who have raised $1M or more:
  • 60% communicate with their investors monthly.
  • 21% say they communicate weekly.
  • 3% communicate daily.
  • And 16% only communicate with their investors on a quarterly basis.

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• Common mistakes when updating founders:
  • #1 Don't go AWOL:  You’d be surprised by how many founders get too busy to update their investors, and then turn up asking for money when their backs are against a wall.  Radio silence gives investors time to ruminate, or wonder why [they] are not hearing from you. [They] will assume the worst if they don’t hear anything. Blindspots breed mistrust.
  • #2 Don't sit on bad news: Communicate swiftly and honestly, especially when something bad happens.  Don’t be afraid to seek feedback.  It’s highly possible that your investors will eventually learn, either by deduction or from someone else in their network, that something is amiss. Make sure they hear it from you first.
    
  • #3 Not having a good investor template: having a template brings you incredible speed. You don’t need to reinvent the wheel for each update.
    • Executive summary:  highlights, lowlights, KPIs, requests, runway
    • Main update: All KPIs, achievements, challenges, asks, plans
    • Nice to have's (depending): new key hires, notable news, thanks
  • #4 Not having enough data
  • #5 Not acknowledging feedback: When your investors give you feedback, make it a priority. Even if you disagree with it, acknowledge it, deal with it fast, or at least set expectations around when you will deal with it.

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