Staying in Touch with Investors #58

What's Below in Issue #58:

You can expect us to share a new weekly topic relevant to fundraising successfully! 

📊 - Data behind the Detailed View into the Lower SaaS Valuation Shift

📰 - A look into how to write investor updates

🎙️- Podcast w/ Ryan Eisenman

💵- Premium startup resources

🆓- Free startup resources

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-----------------------------------------------------------------------------------------------------------------------------------------------------------Data Corner

Detailed View into the Lower SaaS Valuation Shift

Except for very late-stage deals and slightly in the priced seed, the valuations have decreased. The Series E+ has less than half the number of deals which may explain the raised valuation since those are the few great deals that are still happening. The priced seed rise may hint at a bit of a recovery towards the end of the year. However, it is still too small of a change to bring good news. 

-------------------------------------------------------------------------------------------------------------------------------------------------------------Staying in Touch with Investors, a Better Way of Raising Money

Investors are like an awkward friend who comes over regularly, but you don’t have much to talk about. Once the investor gives you money, it may feel awkward to have conversations with them since it will almost always return to how your startup is going. Even if there isn’t much new since the last time you spoke, you feel the need to give them something else. However, at the same time, you want to make sure to look good in the presentation.

When thinking of the future of your startup, you should always hope for the best and plan for the worst. Your current investors should play a large part in that plan.

When your startup is growing at 200% YoY and money is being thrown at you faster than you can count the zeros, it may be easy to ignore your current investors and look for new friends. However, if your startup doesn’t grow as fast as you had planned (for a variety of reasons), or your sector is no longer the sexiest one in town, then the investor world will feel much lonelier if you don’t have a good relationship with your current investors. In just the past year we’ve seen the hottest sector shift from blockchain to AI faster than anyone could expect. Many of the blockchain startups are stranded with little interest in their business unless they can prove their worth at a very high bar (which was not expected last year). In this situation, they will likely need to rely on their previous investors to help bridge them to their next milestone.

So, how do you keep the relationship with your investors?

As with all relationships: communication, communication, communication!

There is nothing more important than staying in touch with your investors frequently and openly. This can be through periodic phone calls or coffee chats (highly recommended for your strongest supporters). However, the easiest method is by writing periodic investor updates. These will help you:

• Stay top of mind. VCs can have large portfolios and unless you are a top performer, they may spend little time thinking about your startup. The less they think about you, the less likely they will want to support your next round. Periodic emails will help keep you and the reason for your investment at the top of their mind.
• Showing growth. The first question VCs will want to know before investing in your next round is if you’ve been hitting your growth targets. This is hard to explain when they can’t remember where you were last year. However, investor updates help highlight your growth and make sure they know that answer before you even approach a new investment.
• Ask for help. Investor updates are the best place to solicit help from your investors. Most of these updates include an “Ask” section where you can request specific intros or recommendations. Investors want to feel helpful to their portfolio companies (even if they can’t always assist). Giving them an ask, creates an easy answer to “How can I be helpful?”
• Build a relationship. Most psychologists will agree that the best relationships are built on vulnerabilities. Yet, it is very difficult for founders to express those challenges to VCs. The investor updates provide a good place for founders to express some challenges they are facing and how they plan on solving them. This provides both a window for the VCs to see how good you are as CEO, as well as building a more human relationship outside of the pure transactional investment relationship.

Making an investor update memo is not difficult. At Thunder, we highly recommend that founders look for a template they like and stick to it.

Here is Thunder’s Investor Memo Template: Get Thunder's Investor Memo Template Here

More great templates can be found in the links below.

We have a few recommendations:

• Find a template and stick to it. If all your updates look similar in structure, it will let your investor skim through them faster and focus on what you are saying instead of figuring out why you chose a new layout.
• Include the story. The update is not just about the wins and losses and what metrics are going up. It is about telling the story of what you are doing and why. Tell the investors what is driving the decisions and what they can expect to see.
• Keep a consistent voice. It is easy to “feel” when a different person puts together the update – even if it is hard to point out why. Keeping the voice consistent helps maintain the integrity of your updates. This means that the CEO should write the update every month. It takes 2-3 hours but may keep your company afloat in times of need. It seems completely worth the tradeoff.
• Keep the same metrics. Don’t switch based on what is performing best! This will piss off your investors. As we’ve said many times – great companies do not need to deceive. When you fundraised the last round you should have chosen the top 3 KPIs for your startup – stick to them no matter how they move. It is ok to have a bad month, just show it and explain what you think happened.
• Keep a consistent frequency. You can choose to update every month, every other month, or every quarter. It just needs to be consistent. This builds confidence in your ability to deliver. There is a balance between updating frequently which creates more investor exposure, and less frequent but allows each update to be a bigger story. It is up to each CEO to decide their frequency.
• Keep it brief. No one has time for long updates. Stick to the main points and why they matter.

Relevant Articles to Investor Update Templates

• Investor Update Templates - 👉 Visible VC
• A Simple Board and Investor Update Template (With Examples) - 👉 Underscore VC
• How to write a great investor update (templates & tips) - 👉 Carta

-------------------------------------------------------------------------------------------------------------------------------------------------------------Fundraising Demystified Episode #26 is Live!

We've got a visionary on the mic in this episode – none other than Ryan Eisenman, the brains behind Arch to discuss the need for software that helps investors manage their private market investments. We will dive into the uncharted waters of the private market as Ryan walks us through the Arch journey – from garage brainstorm sessions to tackling Series A like a pro. And let me tell you, it's not all rainbows and unicorns in the startup world – Ryan's got the battle scars to prove it.

We'll delve into the fundraising playbook, where Ryan spills the beans on building relationships with investors.  Ever wondered how to do reference checks on investors without them knowing? Ryan's got your back. We'll also talk about the importance of community building and collaboration in the startup ecosystem.

As we wrap things up, Ryan gives us a sneak peek into the crystal ball, sharing his vision for the future of Arch and the ever-evolving private markets. Spoiler alert: It involves more zeros in the bank account. Get ready to jot down some serious wisdom! This episode is not just about Arch; it's a crash course in navigating the rapids of modern entrepreneurship. Listen Here

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Let's stay in touch:

Written by Jason Kirby - https://www.linkedin.com/in/jasonrkirby
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