VC Minute – quick advice to help startup founders fundraise better
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One of the things that’s been top of mind for me lately is the power of updates. Companies that have been through Techstars do a phenomenal job of sending out updates. It’s part of the program; it’s part of the culture. And it is that way for a reason. One of the reasons is that we are all subject to recency bias. If I haven’t heard from you in a while, I’ve probably forgotten about you. And I might think, Oh, what was that company with… the thing that did the stuff… in the market about things. And out it goes. This is just part of being a human.
One of the things that a regular update does is help you stay recent in somebody’s memory. For companies that have investors, you should be sending investor updates at least on a quarterly basis. If you’re out fundraising, you should be sending updates on a very regular basis, at least every other week. After you’ve raised money, it’s great to keep investors updated, even in between raises. This could be monthly or quarterly, so find the right cadence. But what it does is keep you at the top of your mind.
I’ll share an example with you. I received a one-off update from a local founder. I had met with her over coffee; we talked about the business, and then I hadn’t thought about her business for a while. She was not in the habit of sending out updates, but she did send a one-off update over the summer. And I had just met with an investor who would be a great fit for her. So I immediately made that connection.
What I’m suggesting is that you add this to your regular cadence. Send it out at least once a quarter to stay top of mind with potential investors. I alluded to this yesterday, but the world that we’re in right now is so heavily dependent on follow-on investment that you are going to need it, not only to keep your current investors updated but to keep other seed investors close to you and stay on top of them.
Finally, there is an age-old saying, “lines, not dots.” This is attributed to Marc Seuster. And really, what that means is that, if we’ve met once, I’ve got a dot. If we’ve met twice, I’ve got a line. If you’re sending me regular updates, I can continue to draw that line in a positive direction. Consistency of the updates is better than thoroughness of the updates. Get them out, send them out on a regular basis, and keep them going.
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