Aristotle taught students wishing to be virtuous to “act as a virtuous person would”. Alfred Adler used a technique he termed “acting as if” to help people change their personalities. Generations have been instructed to “dress for the job you want”. Today we “fake it ‘till we make it”.
This age old technique equally applies in the world of startups. You can see it in action in lean techniques such as:
It also works when it comes to fundraising — if you want to raise capital you should start acting as if you already have. I don’t mean that you should ramp up your hiring or add another product line, I’m saying that you should act as if you already have investors and start doing the work that comes along with it. Much less exciting, I know, but vastly more important.
Specifically, there’s one thing every single company that’s raised capital has to do, no matter what industry or where in the world it’s located, and that is to
REGULARLY UPDATE INVESTORS.
Yep, I’m talking about investor updates. If you were hoping for some quick trick and are now disappointed, hear me out. When considering investing in your company, early-stage investors are trying to figure out four main things:
Better than a pitch deck or executive summary, regular investor updates provide evidence for everything an investor cares about. Let me show you with an example:
Hi everyone,
April was a strong quarter for us. We exceeded our sales target and are getting close to two additional distributer partnerships which have the potential to significantly accelerate our growth.
The good:
The bad:
Metrics / KPIs we’re tracking:
Goals for next month:
How you can help:
Send potential investors a few of these updates and they’ll have everything they need to know about you and your company:
So if you’re not already writing investor updates I highly encourage you to start, even if you don’t have investors yet. It doesn’t take much time, it helps keep you focused on what matters for your startup, and it’ll make the fundraising process — when you’re ready for it — significantly easier.
I’ve already incorporated them into my formal diligence process, requiring that all prospective companies start sending me regular updates. Not only does it enable me to more accurately evaluate the opportunity, it also gives both the founders and I a chance to see what working together will be like. That way when it comes time to invest, we both know exactly what we’re getting into.
I’m a partner at Third Act Ventures, an early-stage firm investing in technologies that help Seniors, and an ambassador for Aging2.0 in NYC. If you’re working on something to make aging easier or happier I want to speak with you!