If your company has gone public, you don’t have much free time. You’re in one of life’s most exciting and complicated times. While juggling old and new responsibilities, you may not have enough bandwidth to craft an investor communication strategy. Making time to reach out to investors is beneficial to your startup. Here are some important reasons why.
Good Communication Builds Solid Relationships
Startup companies need to show appreciation to their investors. That’s why it’s so important that you communicate with them regularly. By solidifying the bond between the two parties, you are solidifying the buy-in of your supporters. If you really can’t find the time to do this, you may consider hiring a firm that specializes in investor relations solutions. These professionals can manage your strategy and ensure that there is just enough contact between you and your investors to maintain a solid relationship.
The more you openly and honestly communicate with investors, the more trust you inject into the association. In turn, the more trust your investors have in your company, the more likely they are to refer your company to others in their networks. No one likes to be left in the dark. If you aren’t regularly reaching out to your stakeholders to let them know what’s going on, they may begin to lose trust and assume the worst.
Some Communications are Mandatory
Publicly-traded companies must follow certain Securities and Exchange Commission (SEC) guidelines regarding investor communications. Depending on the size of your company, you may be mandated to disclose certain information to investors and be disallowed from communicating other types of content.
Startups can’t afford to leave these decisions up to chance. A poorly-timed announcement or misguided social media post can result in large fines. Outsourcing investor communications to a professional resource can pay for itself by avoiding costly fines and negative publicity.
Investors can Provide Valuable Input
It’s dangerous to assume that investors in your startup have no value outside of their contributing dollars. By not communicating with your company’s stakeholders, you may be missing out on useful advice and input. Opening lines of discourse and dialogue from the start can pave the way for a valuable exchange of experience and information.
This may be your first startup and a completely new process for you and the other founders of your business. Refrain from discounting the knowledge they may bring to the table. Don’t shut off the flow completely. Pick the gems that are valuable and show appreciation for input.
Bad News Should Come from You
Any communication strategy must include a process for sharing bad news with investors. Your stakeholders shouldn’t find out that your company is failing by reading a post on social media. Instead, you should communicate troubling news early and often directly to the folks most affected by it.
This strategy can be advantageous for two reasons. One, by communicating trouble early, you open the dialogue with your investors and can receive input from them as to potential fixes or improvements. They may have gone through a similar situation before and can offer good advice. Two, communicating the bad news and the good strengthens trust in the relationship. If your company is struggling, folks are likelier to remain loyal and inspired if you are open and honest about the situation.
Once you’ve taken your company public, crafting an effective investor communication strategy is essential. For the reasons mentioned here, plus many more, establishing an open line of dialogue with your business’s stakeholders can lead to a solid and valuable relationship that will last through the good and bad times. Your company is not only required to disclose certain information, but it should also feel compelled to share relevant news with those who are invested in its future.
