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- ♞ Risk of Investor Updates
Risk of Investor Updates
In my opinion, the greatest tool any startup founder can use to raise capital is the Investor Update. This is an email you send every month to a curated list of investors, providing them with insights into your company’s growth.
These are highly effective because instead of reaching out to investors when you need money, giving them a snapshot of where the company is at, and then asking for cash, an investor update allows you to build a narrative, show your progress over months/years and do so without asking for anything in return.
If your investor updates are good enough, you’ll never need to ask for money; investors will start offering it. So what is the catch?
This gold miner, with a pre-money valuation of just C$15 million, is undertaking a C$2 million Pre-IPO equity raise to restart the Gold Road mine in Arizona, USA, aiming for production in the next five weeks. Idled since November 2021 when gold was $1,650 per ounce, the mine and mill are now primed to benefit from $3,300 gold and rising silver prices. Gold Road, Arizona's only fully permitted integrated gold mill, is set to list on the TSX.V this October. Building a similar mine today would cost close to US$100 million.
Management plans to grow production to 20,000 ounces of gold per year by 2025/26, potentially yielding over US$40 million EBITDA in 2026 and a healthy dividend paid in physical gold and silver. This low valuation offers near-term re-rating potential from strong cash flow, a public listing, and significant exploration upside. Learn more.*
The biggest downside to investor updates is that there is no place to hide.
Once you start sending investor updates, like building in public, everyone can always see what you are doing. There is no way around that. This means that you will need to justify every dip in growth, market setback or failed experiment. By sharing investor updates, you also open yourself to more criticisms of your decision-making and management style, all of which will be on display.
Despite this, I still highly recommend that every founder receive monthly investor updates. Investors know that there will be challenges with startups, and as long as you can explain what you learn from these setbacks, they won’t be held against you. In fact, if investors see you’ve pushed through difficult times before, they will be more trusting that you’ll be able to do it again.
Do you send monthly investor updates? |
Are you looking to grow your business? Here is how I can help:
📱 Book a Strategy Call to get 1:1 feedback on your pitch, pitch deck and/or fundraising strategy. (If you need general startup advice, then reply to this email, and I’ll let you know if/how I can help.)
Onwards and Upwards,
