Toby Egbuna
February 22, 2024

Hello! Welcome to my newsletter - Finessing Funding💰. Each week, I’ll be sharing stories, strategies, and ideas about funding for your startup. Get Finessing funding delivered to your inbox every week 👇🏾

Note: this is the what behind CREAM. Over the next few weeks/months, I’ll be sharing the how. Subscribe to my newsletter to get these insights straight to your inbox.

CREAM:

1. Consider if VC fundraising is for you

2. Ready your documents

   1. Part 1 - Pitch deck and communications

   2. Part 2 - Financial model, market calculations, and data room

3. Establish an investor pipeline

4. Activate your fundraising round

5. Maintain relationships ← today’s newsletter

Congratulations! You’ve successfully closed your round. The press release is out, the money’s in your bank account, your team is excited, and best of all, you can finally be done fundraising.

A common startup adage is that you should always be raising. If you’re going for the rocketship, VC-level growth that gets a bunch of coverage in TechCrunch, this might be the case, but for 99% of founders, this isn’t true. When you’re raising, you’re raising; when you’re not raising, you’re talking to customers, building product, and managing your team (i.e. the stuff that goes into building a real business).

So while you aren’t always raising, you do want to maintain consistent contact with your current investors and with any investors that you established good relationships with. For early-stage founders who have raised a pre-seed and are planning their seed round, your goal should be to close the round with people in your network rather than doing the entire CREAM process over again and finding new investors.

There are two keys to maintaining investor relationships:

1. Sending quality, monthly investor updates (emphasis on quality).

2. Scheduling regular calls with investors.

Sending investor updates

I’m convinced that there’s a direct correlation between founders who consistently send investor updates and founders who are successful (however you define it). It holds you accountable for reporting on the status of your business; it gives you a set time every 30 days to reflect on progress and identify areas of improvement that you might not otherwise have; and it aligns your team on the top priorities for the next month. Let’s dive into how investor updates work.

What is an investor update?

An investor update is a regularly sent report that founders send to investors, advisors, employees, and anyone else in their networks. It highlights wins and challenges from the previous month, details goals for the upcoming months, and lists requests that the team has for its supporters.

How to use your investor update

Your investor update isn’t only for the people receiving it; it’s also a way for you to see who in your network is truly following your company’s progress and to ask for help whenever you need it.

First, if you use a mail merge tool like YAMM, you can see who opened the email you sent. Most investors get tens to hundreds of investor updates a month, so if they open yours, it’s a small sign that they’re interested and following your progress.

Second, you can use your investor update to ask for help whenever you need it. Struggling to figure out how to price your product? Make it an ask. Hiring for a full-stack engineer and looking for referrals? Make it an ask. Looking to get in front of a specific customer? Make it an ask.

Leverage your investor update to get support from your network. Close mouths don’t get fed.

What to include in your investor update

Similar to pitch decks, if you ask 10 people about this, you’ll get 10 different responses. Here’s what I’ve put into my investor update for the past 20 months:

1. KPIs - updates on our revenue numbers, # of customers, and a 1 KPI per workstream (sales/product/marketing)

2. Business update - a 200-word summary of what’s happened in the last 30 days. This is the meat of the update. I typically share a recent learning we’ve had for one of our workstreams and any new customers we’ve signed. This is where you give investors a real peek behind the blinds.

3. Highlights - good news from the past 30 days. New team members, new customers, press coverage; all of that should be listed here in bullet format.

4. Challenges - this is optional, but it’s important if you have anything for #6 below. I include things that we’re struggling with and/or areas we could use help in.

5. Focuses for the next month - a bulleted list of focuses for the next 30 days for each workstream. One sentence per workstream. If you have a team member who owns a workstream, ask them to fill this out so they can get involved and start thinking about milestones the same way you are.

6. Asks - this is where I tap into our community to ask for help with anything. Last year, I asked for connections to UI/UX researchers because I want to be better about customer interviews, and I got 3 intros!

7. Thanks - give flowers! I use this section to shout out anyone in our network who’s made intros for us, referred us to a potential customer, or helped us in another way.

If you’re looking for a place to start, you can snag my investor update template here!

Drafting, editing, and sending your update

Sending an investor update is fairly simple if you have a process for it. If you don’t, and you instead scramble on the last day of the month to write it, then you’ll struggle to get it out on time or you’ll send a crappy update and investors will take notice. To do this well, you want to do it the same way every month.

First, start by drafting your update at least three days before the end of the month. I like to draft the update in full and then give it at least 24 hours before coming back to edit it. Doing it ahead of time also gives your team members some leeway to draft and edit their updates for the Focuses section. I suggest using a collaborative tool like Notion or Google Docs so multiple team members can edit it.

Once the update is drafted and edited, paste it into a new email. If you’re using a mail merge tool, leave a placeholder for the recipient’s name so it’s at least a little personalized (investors know that these are sent in bulk, but it’s still nice to read “Hi Toby!” at the start of an email).

Next, schedule the email to be delivered. Be sure to send it at the same time every month. This is important. You want investors to become familiar with how you work, and consistency shows. I send my update at 6pm ET on the first business day of every month (unless it’s a Friday, in which case I send it on the following Monday).

Finally, give it 2-3 days before checking the mail merge report to see who opened the email. No need to track this anywhere, but it is always good to make mental note of who’s following your progress and who isn’t.

Some additional tips:

• As wins come up throughout the month, keep them in a running list somewhere so you can refer to them for your highlights section. This can be as simple as keeping a list on your iPhone or a Notion doc.

• Keep it concise. I’m sure there are ten different things you could walk the investors through. Don’t do that. Instead, pick the biggest 1-2 items and cover those in your business update section.

• Don’t overshare. You want people to read this update feeling optimistic about your company. If you’re having one of those months where everything seems to be going poorly, find a silver lining and talk about that. It’s an investor’s job to do their due diligence and find problems that you’re facing, so don’t do their job for them.

Scheduling regular calls with investors

While your investor update is great for asynchronous communication with your network, nothing beats a phone call or in-person meeting.

There are two use cases for calls with investors:

1. To keep existing investors updated on progress - Your lead investor will probably want to meet at least every 2 months to check in and see how they can help.

2. To stay connected with potential investors - for the investors in your pipeline that passed but remain interested, these calls are a way for you to keep them updated on your progress. This is especially important if you plan on raising another round of funding (which, by the way, you don’t have to do).

How often to have calls with investors

For the existing investors, you can have calls as often as you need them. There’s no recommended cadence here, though some investors will insist on meeting at a cadence of their choosing.

For potential investors, try to connect with them every 3-4 months, and then if you decide to raise again, up the frequency to every 6-8 weeks a few months before you kick off the raise.

An agenda for calls with investors

These calls can and should be very casual. You’ll probably schedule 30 minutes, but you should be able to close things out in closer to 20. Consider the following agenda:

1. Shoot the breeze (5 mins) - remember, this is a relationship game. You want the investor to like you as a person and as a founder.

2. Share your updates (10 mins) - go through updates in KPIs, new team members, product updates, and any trends you’re seeing. You should be able to pull these from your recent investor updates.

3. Q&A (5 mins) - ask the investor if they have any questions for you. If you are planning on raising again and you’re not already sure, use this time to figure out what the investor would want to see from your company to make an investment in your next round.

Summary

Fundraising is part of the job, and even when you’re not actively raising, you want to be doing the things you need to do to make sure that you can when the time comes.