It goes without saying: your communications efforts shouldn’t cease the second you hit your raise target.
Naturally, they should evolve - from sales and marketing-led imperatives to informative ones. As your investors become your shareholders, and as you move from founder to executive, they’ll want and expect to be kept in the loop.
Generally, the first stage will be an expression of gratitude. Thank you and welcome emails are just good manners, and they’re also nice to send. But the not-so-nice-to-send emails are where many startups drop the ball.
All post-raise communication strategies should be underlined by one key principle: transparency. Enthusiasm when things are good; honesty when things are bad. Of course, you don’t have to send an email the second a power outage hits your server, or a customer has an allergic reaction to your product.
But updating them after the fact on what happened (and how skilfully you fixed it) builds trust, especially if your investors are likely to hear about it from another source.
It’s helpful to think of investors as part of your customer segmentation. They form a key customer group and should be treated as such. All communication should be on-brand. It should be tailored and exclusive to your investors’ wants and needs. And it should be sent on a regular schedule (whether it’s monthly or three-monthly) so they know when they can expect to hear from you.
Communicating with shareholders in equity crowdfunding
When raising equity through crowdfunding, this level of communication goes from a nice-to-have to a non-negotiable.
Crowdfunded projects are a sociable, personable enterprise that allow investors to get involved with projects they’re passionate about. You won’t just be another startup in a VC’s client base, or just another entrepreneur asking a bored bank manager for a loan. You’ll be a brand that an investor has picked out of a sea of thousands, and they want to see you go further.
But you’re likely to have a mix of investor types within your crowdfunding pool. How can you communicate effectively and consistently with all of them?
Types of investors
Seasoned investors: a portion of your investment funds will come from experienced or sophisticated investors who expect a high level of communication. They might have larger sums of money tied up in your raise. They’ll not only be anxious for updates on progress, successes, and potential returns, but they’ll also expect a level of gratitude for their time and money. Regular updates are a way of respecting this, and issuing a kind of recompense for their backing.
Hobbyist investors: some of your funders will be new to crowdfunding. They might even be new to investing entirely. Some will have dabbled experimentally or as a hobby. The accessibility and excitement of crowdfunding campaigns draw a lot of recreational retail investors. After the buzz of investing, they’ll want the fun to continue, and to feel like part of your endeavours.
Middle ground investors: you’ll likely also encounter a lower-maintenance middle-ground. A large portion of your investors may have taken the option of a low buy-in price. They might not have as much money tied up in your raise as a professional, or as much sentiment tied up as a newbie. Maybe they contributed on a whim, or are an old-hand at CSF investment. These are the group less likely to be bothered by a lack of contact.
However, within this relaxed approach - or even apathy - is a warm lead for future campaigns. If you can give them an enjoyable, inclusive experience that stands out from other investing avenues they’ve tried (or other crowdfunding campaigns), they’ll be much more likely to invest in future funding rounds.
What shareholders want from startups
The investment landscape is changing, and shareholders no longer want to be seen as sharks.
Talking cold hard cash is a pretty key part of the investor-founder conversation. In fact, it’s a legal obligation.
But money talk at dinner parties? It’s becoming a little crass. Bragging about profits is so pre-GFC. True dinner-party bragging rights come with conscientious involvement, whether it’s benevolently-minded support of young entrepreneurs and innovators, or investment in ethical startups and world-changing inventions. But your investors can’t tell everyone how conscientious they are if you don’t keep them in the know.
By the same token, if a shareholder mentions their involvement in your raise, and is asked about your recent notable successes or activity, they’re going to feel a little silly if they don’t know. Make it easy for them to tell others about you. Make your update content newsworthy and shareable.
How to communicate with investors
Naturally, you’ll need to find a communication style that caters to all investor types. Here are some pointers for ticking all the boxes in your updates.
- The Golden Rule: always update every investor at the exact same time. Accidentally leaving out names, preferential updating, or sending different updates to different parties is an obvious no-no.
- Keep it short: more short email updates are better than infrequently-sent essays. Don’t take up more than 5 minutes of their valuable reading time.
- Keep the tone professional: depending on your brand or individual personality type, you may have infused your crowdfunding campaign with varying degrees of flair and personality. Keep things engaging and on-brand, but keep sentences short, simple, and to the point.
- Partner with a registry service: at the end of the CSF Process, companies will have certain post-raise obligations they’ll need to fulfil, Share Registry being one of them. Often, when you part ways with your fundraising platform, you’ll be referred to someone who can help you keep track of share ownership while you’re busy running the business.
When founders complete a raise with STAX, we refer them to our Share Registry partner Automic. They provide a platform that records changes in share ownership, issues statements, and manages dividends. It’s a cost-effective way to streamline future communication with shareholders. They also provide a one-click mechanism to update ASIC for new shareholder additions.
When the admin is taken care of and data prepared for you, you as a founder can focus on active communication, perpetuation of your brand, and keeping your shareholders engaged and committed.
If you are considering raising capital, contact our listings team here.