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The Downside of Investor Newsletters Part 1 + Fundraising Fieldnotes 10.22.24

The Downside of Investor Newsletters Part 1 + Fundraising Fieldnotes 10.22.24

Jason Yeh
October 22, 2024

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You’ve seen countless founders write them. You’ve received advice to write them yourself. But do you know if it’s actually a good idea? And if so, why?

Yes, I’m talking about “Investor Newsletters”—not the updates you send to investors already on your cap table, but the “keep them in the loop” newsletters to VCs who could potentially invest in the future.

Many founders believe they should be sending these newsletters religiously. I, however, am not a fan. Instead, I’d like to challenge the idea that sending these updates monthly is truly effective and share some fresh strategies that will actually keep prospective investors engaged.

In this two-part series, we’ll explore why many founders think these newsletters are crucial. In the first part, we’ll discuss why this approach might not be as effective as it seems and also look at alternative strategies that could better engage prospective investors and help you control the narrative around your company.

If you’re a startup founder tired of the same old newsletter advice, this one’s for you…

Newsletters: The Ultimate Waste of Time?

First of all, what is a monthly investor newsletter? Typically, it involves founders compiling a list of investors—often people they've engaged with in the past—and adding them to an email list. Each month, they send out an update that might say something like, "Hey, here’s an update on what we’ve been up to at [Company Name]. We’ve made some progress and have exciting new developments. Thanks for following along."

The idea behind this is that founders often hear it's beneficial to keep investors updated, hoping to pique their interest in what you're doing. They might even reference Mark Suster from Upfront Ventures, who has written blog posts supporting this approach (lines, not dots).

To start, I agree that investors will more often invest in lines, not dots. Having reference points to validate progress rather than being asked to invest after learning about a company for the first time is absolutely the easier approach to convincing VCs. Where I differ is around the belief that regular investor newsletters are the best way to achieve this goal. I believe it’s a misguided approach. It’s not the most effective way for most founders to drive a fundraising effort and only benefits a very small number of people.

So who benefits from it?

1. Investors

The first group is investors. Think about it—it's an investor's job to keep tabs on many companies and identify which ones are doing well.

When they see a company performing really well, they might seize the opportunity to invest. But by sending these newsletters, you’re essentially giving all this data to investors on their terms, not yours.

The only investor updates that are actually going to capture their interest are those where the results keep going up and up. And in the up and to the right cases, founders could drum up excitement far more efficiently.

2. High-Performing Founders

The second category of people who benefit from investor newsletters are founders who consistently execute and demonstrate progress every month. For these founders, each investor update is compelling and exciting, showcasing achievements and milestones that reflect steady momentum.

However, very few founders and companies, especially first-time founders, fall into this category.

For the first season of Funded, I interviewed Sam Corcos, the founder of Levels, about his approach to fundraising. One of his approaches to raising capital was sending extremely transparent monthly updates about his company to any investor he had ever met. Transparency in what they were doing worked because Sam’s execution during those early years was impressive—actually, it was otherworldly. So did his monthly newsletter updates work? Of course they did. This approach would benefit any company that operates like a well-oiled machine, always hitting its goals and consistently saying, "Look, I’m doing it, I’m doing it, I’m doing it."

But here’s the thing: those types of companies are rare and don’t actually need the additional momentum of an investor newsletter to get their fundraises done. I’d argue the added benefit to them was minimal and cost a decent amount of work to execute.

On the other hand, companies that don’t have consistent, month-over-month "awesome" progress to share are the ones that need a bit more finesse when it comes to fundraising. If you’re producing an investor update where maybe one month is good, but the next month is kind of "blah," and the following month is just okay but not great, that’s not the finesse that helps a non-breakout company successfully fundraise.

But wait... there’s more. In the second part, I’ll give you the inside scoop on how to really control the narrative around your company. I’ll share practical ideas and examples on turning milestones into opportunities for engagement and making your updates pop.

If you’ve enjoyed what you’ve read so far, stick around for the next newsletter—you won’t want to miss it!

Be chased,
Jason

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🤡

— sarah guo // conviction (@saranormous)
2:42 PM • Sep 3, 2024

Do everything you can to maximize energy around your company and the work you put into it…

energy is the key to success
— Shaan Puri (@ShaanVP)
1:06 PM • Sep 3, 2024

They really know how to manipulate you… 😂 😺

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