Sunday, September 08, 2013

For Investors, No News Is Bad News

I often advise entrepreneurs to provide regular updates to all their investors.  You don't have to set up weekly one-on-one meetings--they're busy people too.  A simple email every two weeks, with an update and the latest numbers, is more than sufficient.

Entrepreneurs balk at this advice.  "Don't they trust me?" the incredulous founders ask.

To put it bluntly, no.

Every experienced entrepreneur understands that it's a very bad indicator when a founder goes radio silent.  There are three basic possibilities:

1) Business is so good that the founder is way too busy to send an update.  Fortunately, the next missive will be an acquisition announcement.

Sadly, this is pretty unlikely, given that the founder has already established a pattern of sending over the slightest item of good news.

2) Business is so bad that the founder is scared to send an update.  Alternately, the founder is in the hospital, which means that the business is in even worse trouble.

3) The founder doesn't give a damn about the investors.

Option 1 is vanishingly rare, which means that no news is bad news.

Now perhaps you are that rare exception--do you really want your investors thinking that either 2) or 3) are true?

Send the update.  Bad news is actually better than no news.

1 comment:

Michael Blend said...

And most importantly, you owe it to your investors to keep them fully informed. The worst kind of entrepreneur is one who stops communicating with her investors once the check is cashed