|#537 MWAVC| — On Investor Updates 💻
My response to an investor update I received last night
Hi,
Welcome (back) to MWAVC, a newsletter about finance, investing, venture capital and all that jazz. My name is Ato (more about me here and here) and I try to write every single day, inspired by Seth Godin (Seth’s Blog) and Fred Wilson (AVC). I haven’t done the best job over the last few months (read: years 😬), but I’m working to be better and more consistent, even as I manage this crazy schedule.
I’ve been investing in some way shape or form for the last 12+ years and now work with one of the pre-eminent VC firms in Africa - Microtraction, and the family office that acts as the GP - Pave Investments. Read more on us here and here. Most of these writing are stuff I find interesting that I’d like to share and hear your thoughts on. This is also an outlet for my thoughts, lessons, asks etc. and I think you’d find most of it valuable if you’re remotely interested in learning about venture capital.
I’ll be developing the content more, including things I think will be helpful and would appreciate any feedback on what’s working vs. not, and what could be helpful for you over the long term. If you’d like to sign up, you can do so here. Or just read on.
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On Investor Updates 💻
It’s 4:44 am in Accra and I’m wide awake reading an investor update I received from a company I’m mentoring in the Techstars ARM Labs Accelerator. Shoutout to Oyin and Dunni for putting on an excellent program for founders looking to build the next generation of scalable companies in Africa.
I always suggest that very early in the founders’ journey, they consistently document their progress, key insights into the problem they are solving, questions they’re asking and process to make any decisions. When any investor sees this level of dedication and growth in bringing others along in the process, they get comfortable, knowing that you didn’t just stumble upon the idea, but the current state is the result of months or years of work, carefully documented. Some founders look at investor asks as a bother and do not put proper effort in curating them, while others don’t share updates at all (PSA: in case no one has told you this, this is a horrible practice). I hope there is something to learn from me sharing this today.
While this was this founder’s first update to me, it’s clear that the business has been in operation for a while and running full steam ahead growing revenues by 50% since December ’23. His update took the following format below, and to protect their and the company’s privacy, I have “redacted” certain words, figured and key information and replaced words with “XXX”.
Company Name – XXX
Program Name – ARM Labs TechStars Lagos
What you do – XXX
Section 1: KPIs (Week ending 2/2/2024)
Subscriptions closed in January: $XXX so far in Jan. 2024, +50% vs Dec. 2023 (XXX).
February pipeline: $XXX (XXX% vs February target of $XXX); Q1 2024 target of $XXX being the lowest quarter in 2024.
Data asset expansion: Met with XXX on XXX to explore mutually beneficial partnership and XXX.
Met with XXX on XXX for a follow-up discussion regarding XXX.
Meeting with XXX in XXX on XXX to discuss $XXX subscription to XXX.
Version 2 of XXX at XXX% completion and version two of XXX at XXX% completion.
XXX engaged by industry leaders to provide XXX.
Section 2: Asks
Introduction to XXX in the XXX space for potential partnership for XXX.
Section 3: Struggles
Finding local XXX Database Engineer locally in Nigeria. Currently engaged a contract staff.
Runway in months: XXX months
While this is a great update, I spent some time to give detailed feedback to him, which I hope will help other founders keen to update their investors on their progress. Also, note that this update still needs some work, because there’s a lot more information the founder could be sharing with his investors. My feedback is helpful in gradually getting to that state, which we will arrive at in due course.
Dear XXX,
Thank you for adding me to these updates. I believe it's a great start with the brevity and summary of what you do, why you do it and the value you bring to your customers. I have a few questions/ pointers that can potentially help make these updates more effective for the reader.
KPIs: For the subscriptions closed/ in process of closing, can you provide a breakdown of how many companies they comprise of? This will help anyone reading it to get a better idea of how you're progressing on the user side, how they compare to your goals and what the potential could be. For example, today, it's not clear if your January revenue number ($XXX) is from 1 or 10 customers. If it's 1, I know it's extremely important to help you find 10 viable customers who can pay this same rate, which brings your potential revenue to $XXX, which is definitely a more exciting number :).
Asks: In the "Asks" section, I would suggest that you be more thoughtful and expansive in this area, because it's the help from whoever reads this document that will help you get to your goals. It would be helpful to have a preamble of your targets for the quarter/ month saying "we hope to achieve xxx this period, which will bring us closer to our full year goal of xxx. As such, we need xxx." Don't hold back on the asks, and be specific as possible. This request you have stated here will likely go over people's heads. It's better to put it as "We'd like introductions to XXX startups. We have identified (5 names of XXX startups) as our priority targets because xxx, and we'd appreciate introductions to them. Other EMRs we have briefly looked to partner with are (10 names) and will appreciate any introductions there too." This shows that you have done your work and research. If any of those names look remotely familiar to me, I'd be able to make that introduction quickly. However, the way it's stated right now puts the onus on me, the reader, to think about XXX companies I know and then make the introduction. It will not be as present in my mind or I will not be moved to take action like how I would if you said "I need an introduction to (Company Name) because xxx." This way, (Company Name) is what's on my mind and if for any reason, I hear about them in another conversation, it will pop up in my mind that XXX needs an introduction. It will also be helpful to add a blurb that I can quickly copy, paste and make that introductory email. For requests, it's always best to make the work of the other party as easy as possible. I hope this makes sense and I'd be happy to explain further, if necessary.
Struggles: For the Struggles section, do you have a job description I can share? Or something I can post on my LinkedIn with a link? Who should applicants for this role contact for more information? Again, the purpose of these updates is to make sure the people reading them can actually help you figure things out and take some burden off you. The way it's written now pre-supposes that I know XXX Engineers and I will easily send one your way. While a few readers may have that ability, it's helpful to make this easier for the other, possibly majority, who may not have those insights or connections, but can be a channel for you to receive these requests.
I'd appreciate it if you could reformat based on my feedback and share an updated version, so I'm ready to help as much as possible, for this period.
Thank you and I look forward to receiving your future updates.
I hope this is helpful to some founders out there. I’m happy to speak more on this with anyone looking to build a company and wants feedback. Thinking of bringing my Office Hours back for founders to book 30 minutes to tell me about themselves, their businesses and ask for feedback, but haven’t made a full decision yet. Should I? 😬
Currently Reading 🎒
Just finished Olumide Soyombo’s Vantage. I ordered this book immediately it came out, but my copy got stuck somewhere and never made it to Ghana. Thankfully, my cousin was out and about in Lagos last month and brought me a lovely Christmas present. I will be writing book reviews, sharing my notes etc. in future posts. But if you are remotely interested in learning about the venture space and want to glean from the experience of one of the most prominent figures in the early stage tech investing in Africa, get the book here. Check out his podcast interview with Dotun on the Building The Future Podcast. First listened to this in 2018, and reading the book brought back to many memories, and as I reflected on my notes, I just had to go back and listen again.
Currently Listening 🎧
Last podcast episode I really enjoyed was Red Bull’s Billionaire Maniac Founder: Dietrick Mateschitz on Founders. Check it out, and you won’t be not amazed. I’ll be sharing notes on these as well in future posts.
If you are a (or know any) pre-seed, seed or Series A investor, looking to co-invest in African founders, please reach out to me and let’s do some work together.
Remember: “Until the lion learns to write, every story will glorify the hunter.”
Please share and subscribe as well.
Till tomorrow,
AB