TBC: Why Monthly Investor Newsletters Might Be a Bad Idea for Founders

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Hey guys, welcome to this episode of the back channel. In today's episode, I want to do a complimentary episode to an episode I recorded a week ago, about a week ago. Regarding a tool for investors, a good way to make investors stay top of mind with other investors. How to get more deal flow.

And that was the idea of a personal newsletter. It was well received. People thought it was very interesting and good insight into how VCs think a lot of VCs thought it was a good idea for them. Uh, now I want to talk a little bit about newsletters for founders.. A lot of founders get this idea that they should be writing and sending this monthly investor newsletter to all the investors that [00:01:00] might be hanging around the hoop kind of interested potentially may want to invest in the future. I want to cover this topic and maybe disvalue of this idea that it's such a good idea. To write a monthly investor newsletter to keep people up-to-date on monthly basis.

So, first of all, what is the monthly investor newsletter? Usually I see this as, um, people getting together a list of names, maybe people that they've talked to in the past, they manually adding random people to along email list and then monthly saying, Hey, you know, this is what we've done at adamant.

Here's some of the progress that we made here are the things that we're doing that are exciting. Thanks for following along. And the thought being that founders have heard, it's good to keep investors updated, get good for investors to get interested in what you're working on there. They will. They will attribute Marc Seuster from upfront ventures. blog posts around.

Mine's not dots. So seeing multiple data points, maybe tracking them. Here's what [00:02:00] I'll say to you all who think that investor newsletters are a good idea for founders. I think it's a misguided approach to communicating with investors. It's not the most effective way to drive a fundraise.

And it benefits only a very few number of people. The first types of people that it benefits is investors. It mainly benefits investors think about. That's an investor's job to keep, keep tabs on a bunch of companies and try to see when companies are doing well. And when they see companies doing really, really well. Uh, then maybe they'll get a chance to invest, but you're kind of giving all this data to investors. On their terms and not your terms. And the only investor updates that are actually going to be interesting to investors. Are ones where the results continue to go up and up and up. Right.

So that's the second category of person [00:03:00] or entity where investor newsletters are beneficial. It's the founder who is constantly executing and every month it goes up and up and up and you, every investor update is super interesting. It's like, oh my God, I can't believe they did this. Oh my God.

I can't believe they made this. Higher. Oh my God. They, they said they were going to do this and they did it. That is very few founders in very few companies, especially in the early days. Now I will say that I've seen this, right. A lot of people will point to someone like Sam Who in the first couple years of levels? Was religious about posting monthly investor updates, transparency in what they're doing. And I'll tell you it worked. Because wow.

His execution in the first couple of years was impressive. Right. And it does benefit companies like that. It would benefit a company to be able to say, look, I'm doing it. I'm doing it. I'm doing it. But I'll tell you. Those types of companies don't [00:04:00] need the additional momentum of an investor newsletter to actually get their fundraisers done, which is kind of the conundrum.

It's kind of a funny thing. It's like, yeah, I guess it would work in this scenario. But they didn't need it.

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[00:05:00] The companies who might not have that kind of marching month over month. Awesome. Update to be able to share. Those companies, well, they need a little bit of finesse when it comes to getting a fundraise done. And producing an investor update where maybe you have a good month and it's kind of interesting, but the next month is kind of blah.

And the next month is also kind of may. And then the next month after that is, is okay, but not great. Well, that's not the finesse that you need to successfully fundraise. What I would tell people is when you think about investor communications, you want to control the narrative at all times. Even if you are accompanied as fully executing in humming, along and running on all cylinders. Well, I think there's a more sophisticated way to approach communicating with investors. And building relationships because that's what it's all [00:06:00] about. Here's what I would advocate for. I wouldn't do a blind, monthly investor update because one, you know, I don't think it behooves you to spend that time updating people that might not invest in you.

I don't think it behooves you to share. Months that aren't great. And instead think about it as, yes, I might have a mailing list. Of prospective investors that I update. But I'll do it on my terms and I'll do it in a way that positions the company as being interesting. And that it's a one-off announcement. That, was the reason that you're emailing, not because you're saying you're going to do this monthly update.

So for example, if you wanted to send out an update because something good happened, maybe you would attach, attach it to another announcement. Maybe you would recognize investors on your cap table. Maybe you would say that you need help hiring. Maybe you would ask for help with connections to a company because, oh my [00:07:00] gosh, we already found product market fit in this space. Uh, in this industry, our revenue has grown like this.

Can you introduce us to companies in this space? So it bakes the update. Into a request for help, which I think positions that sort of update that sort of one update in our really positive light. Think about it. If they hadn't heard from you in four months and a note goes out that they read, it's like, Hey. A request for intros to the telecom industry. And it's like, Hey, I know you guys have been following along the journey of adamant, wanting to reach out to everyone who has followed along and has been a supporter.

And just ask if anyone has any connections to the telecom industry. Adamant has been doing extremely well of last three months. We've grown 30% month over month. We've added some of the best talent in Los Angeles. And now we really want to take on Telekom. Does anyone have introductions to 18 T Verizon or whatever? That looks like much more of [00:08:00] a compelling update because it's baked into a request and the request is much more about like, look we're growing so well. That we need help connecting to these amazing companies and it can really pique the interest of investors. Compare that instead. To a monthly update where like, maybe you'd be able to share some good updates and maybe it would be red. Um, but it just doesn't have the same possess.

All right. So I would rethink your communication strategy with investors. Don't just be lazy and default to a monthly newsletter where you're not going to have the energy to make them all good. And you're not going to have the numbers to make them all good. Uh, also don't be lazy around building relationships with investors themselves.

Spend some time maybe on personal updates, um, directed at personal investors, spend them some time. In geographies where investors are and be able to find time with them in person. try these things rather than the blind. Dumb investor update. I think it will. Um, [00:09:00] serve you guys really well. All right. That's this episode of the back channel. I hope it was helpful. I hope it makes your communications with investors better. And I'll see you on the next episode.

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