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    Communicate transparently with your angel investor

    8 Tips for Communicating With Your Angel Investors

    Guest Post
    Angel & Venture Funding

    By Brett Farmiloe

    What is one tip to improve communication between entrepreneurs and angel investors? We posed this question to small business owners and investors and asked them to share their best advice. From thinking strategically when sharing problems to keeping communication meaningful, here is how to communicate with an angel investor, and ultimately, build a stronger relationship.

    8 tips for communicating with angel investors

    1. Be strategic when sharing problems

    "Never forget that your angel investors likely have expertise beyond your own, and that they're one of the most valuable resources in your entrepreneurial journey. When you're facing small difficulties or tough decisions, the impulse can be to hide them from investors out of fear, which can end up being a waste of their knowledge. Touching on a few strategic issues that you're dealing with as part of your update can leverage their expertise, and can also strengthen their trust in you.

    "Do be strategic about it—some problems aren't theirs to solve—but asking for help can end up serving your business best, and can build stronger relationships with your investors."

    —Stephen Light, Nolah Mattress

    2. Don't sugarcoat it

    "Angel investors get in early and do not expect perfection. They know it is going to be a learning process to determine product/market fit. Share the good news, but also the learnings and pivots. They are eager to help you brainstorm on solutions and will do introductions to make you successful. If you don't ask for help you won't get it."

    —Michelle Tinsley, YellowBird Holdings Inc.

    3. Be precise—investors hate uncertainty

    "Sometimes, entrepreneurs forget the slight difference between risk and uncertainty. While the first term is measurable, the second is not. Investors, especially business angels, put their money into innovative projects, which might seem quite insecure at first. However, it is only a misleading impression because investors' exposure to the risk is calculated in detail.

    "So my advice is simple: avoid uncertainty. But what does it mean exactly? Well, the relationship with a business angel is like talking with parents. Mom and dad don't need to know everything about their child's life, but they enjoy the child's growth. The same is true when dealing with investors; they need to feel comfortable estimating their risks.

    "For this, they need clear, transparent communication concerning any necessary information about a project's progress. Therefore, it is advisable to have actual numbers that the company will regularly deliver to its business angel from the start of the partnership."

    —Tytus Golas, Tidio

    4. Focus on milestones

    "Send updates that are valuable to your investors. That might include things like progress on your product, growth in user engagement or acquisition, new partnerships or hires, and any significant milestones you've hit."

    —Claire Westbrook, LSAT Prep Hero

    More articles from AllBusiness.com:

    • Angel Investing: 20 Things Entrepreneurs Should Know
    • Angel Investing: How To Invest In Tech Entrepreneurs and Startups
    • How to Develop Lasting Personal Connections in a Digital World
    • 50 Questions Angel Investors Will Ask Entrepreneurs
    • Raising Financing for Your Business

    5. Include as much data as possible

    "Investors want to see where their money is going. By providing updates containing as much data as possible, you are painting a full picture of your business and giving them the tools to figure out how to best support your business moving forward."

    —Lauren Murdock, Mainvest

    6. Set frequency and method expectations

    "Because investors are mostly busy people, there's no assurance that the regularity and style of communication you prefer will work for them and their schedule. As a result, it is critical to establish clear expectations with them from the outset, such as how many times a month updates are to be sent and what type of communication will be used.

    "Some may prefer to get updates by email, while others may prefer a brief phone call. Furthermore, some investors prefer to receive updates at least once a week, while others are content with only one update each month. It is critical that you hold a formal meeting to establish reasonable expectations regarding frequency and methodology so that you can devise an approach that benefits both parties and is efficient and productive."

    —David Bitton, DoorLoop

    7. Send out monthly email updates

    "Although a lot of angel investors are generally low maintenance, they still would love to be updated on the status of their investments. Make your investors feel recognized by sending monthly updates of how things are going. The goal is to help them understand how their investments are doing and to provide them with clear points of engagement with the CEO.

    "Consistent communication is the key—a short monthly email in a clear and easy format that covers markets, products, finances, and customers will do the job. Make sure to put everything in the email body itself and not via an attachment so that the recipients can read and respond to your message easily."

    —Kris Lippi, ISoldMyHouse.com

    8. Consistent outreach is a must

    "Consistent outreach is one of the keys to building strong relationships with angel investors, and regular updates are never something that you want to let slide. When communication is routine and habitual, the other hallmarks of a good relationship are easier to build—trust, respect, mutual understanding—and excellent relationships with investors are crucial to growth.

    "Failing to fill in angel investors is how you fail your business, because updates aren’t just a nicety, they’re a part of healthy operations. Plus, when you’re consistent, you don’t need to sit down and write an essay. When you don’t have to fill someone in on months of work, you can be brief and focused."

    —Roy Morejon, Enventys Partners

    RELATED: 10 Things Entrepreneurs Should Never Say to Potential Investors

    About the Author

    Post by: Brett Farmiloe

    Brett Farmiloe is the founder of Terkel, a Q&A platform that connects brands with expert insights.

    Company: Terkel.io

    Website: www.terkel.io

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