When a raise closes, it is tempting to feel the hard work is done. In fact, a new relationship has just begun. How you communicate with investors over the following months and years shapes whether they back you again, and whether they recommend you to others.
Why reporting matters
Investors who hear nothing assume the worst. Investors who get regular, honest updates feel involved and informed, even when things are difficult. When the time comes for the next raise, the second group is far more likely to support it.
For debt investors, reporting is often a formal obligation in the documents. For equity investors it may be less formal, but it matters just as much.
What to include
A good update is short and consistent:
- Headline: how the business is doing, in a sentence or two.
- Key numbers: the same measures every time, so investors can see the trend.
- Progress against plan: what was promised, what was delivered.
- Use of funds: how the money raised is being spent.
- Challenges: what is not going well, and what you are doing about it.
- What is next: priorities for the coming period.
How often
Quarterly is a good rhythm for most businesses. Monthly may suit a fast-moving company with engaged investors. What matters most is consistency: pick a schedule and keep to it.
Handling bad news
Bad news delivered early, with a plan, is manageable. Bad news discovered late, or hidden, destroys trust.
If something goes wrong, tell investors promptly, explain what happened, and set out what you are doing about it. Most investors understand that businesses have setbacks. What they do not forgive is being kept in the dark.
The long view
Every update is part of the case for your next raise. The founders who find fundraising easiest are usually the ones who kept their investors well informed through the last one.
Mark Johnson is the Founder of BDM Capital, which introduces capital raising opportunities across bonds, loan notes, IPOs and SEIS/EIS. To discuss a raise, get in touch.
Frequently asked questions
Trading against the plan presented at the raise, cash position and runway, progress on milestones, any covenant tests, and anything material that has changed. Debt investors also need confirmation of security and interest payments.
Quarterly is common for equity and loan note investors, with monthly updates in the early period after a raise or when the plan is behind. The frequency should be set in the documents and kept to.
Because the next investors will ask the current ones. A company known for clear, regular reporting raises more easily; one that goes quiet after taking money does not.
BDM Capital is not authorised or regulated by the Financial Conduct Authority. This article is general information, not financial, tax or legal advice, and does not constitute an offer or invitation to invest. Capital is at risk and you may get back less than you invest. Written for founders and directors of businesses considering a raise. Take independent professional advice before making any investment decision.
