Today’s Soapbox opinion was written by Alejandro González Alemán, Managing Partner at Redwood Ventures

Contxto – There are two kinds of founders: The ones that hate making investor reports and the ones who deny it.

But this is perfectly understandable. Almost nothing a Founder must do to send a monthly report to investors or a quarterly presentation to the board, adds to the mission and vision of the company. (And we as VCs know it.)

Never in my 10 years of working with entrepreneurs have I found someone who is passionate about writing an investor report.

Everyone would rather spend all night coding, waking up early to take a red-eye flight to meet with a potential client, interviewing 50 job applicants in one day. All of that before having to write, again, that damned report.

Reasons to hate reports

I believe there are two main reasons to hate reporting to investors:

First, because of how much of a stressful task it is. It’s a more or less repetitive task, with a deadline that requires having to apply pressure on everybody. You have to pressure the accountant, the manager, the salespeople, the finance people, the COO, the CTO…

On the other hand, you have everybody pressuring you. The VC fund, the accelerator, the angel investor, the crowdfunding, your board, and possibly, even your uncle (the one you no longer remember why you invited him to invest).

All that pressure just to generate something that is seemingly useless to the growth of the company, while other thousand things are happening that require your attention.

Second, you never know how others will react to the report.

It seems its never good enough. It always generates more questions than answers. You stay there vulnerable only to be criticized and sometimes you end up revealing info you don’t even know if you should. Add in the stress of what people might think of you.

A lot of stress on top of regular stress. (What a pain to be a founder).

Reporting is a life’s fact

But as a good friend always says: “Welcome to the real world”.

While the pain of doing periodic investors reports is understandable, I want to propose a few ideas that could make it a little bit easier. They may even get you to go from hating to loving reports.

1. Align expectations

Everything is simpler if you know exactly what to report. It is best if you establish which are the indicators you will be reporting each very period, from the beginning.

2. Simplicity above all

You can have too much information. I recommend you to keep it simple:

Two or three performance indicators (transactions, GMV, downloads, MAU, average ticket, pipeline progress…); five financial indicators (sales, expenses, burn-rate, runway, cash-on-hand, CAC, gross margin…); two objectives (launch a product, raise capital…), and one request (contacts, advice, opinion, go over a document…).

Nobody likes to be overloaded with information, but neither do we like to receive less and less information.

To quote Duran Duran may seem dated, but, as they once sang: “I hate to bite the hand that feeds me so much information… It’s too much information for me”. 

3. Be consistent

They say if you want to be taken seriously, you have to be consistent. Try to keep the same format and indicators in your report. This will help you generate the necessary processes so that it is easier to generate it and so that you don’t have to be in a hurry and chase people around.

Plus, maintaining consistency in your report will make it easier to understand and any explanation will have to be given only once. Say goodbye to unnecessary questions.

4. If it’s useful to them, it’s useful to you

And vice versa. The idea is that the information you report actually says something. If it doesn’t say anything, it’s useless. If it says something, it’s useful for everyone, including you.

A good practice is for the investor report to include the information that is already relevant for you as a Founder. What do you pay attention to and why? What things don’t let you sleep at night if you don’t know them? Who reports those things to you?

The idea I want to express with this point is that making the investors report shouldn’t be more complicated than gather information you already have. And if you don’t have it, you should.

5. Don’t do it yourself

Once you have the first four points covered, do not make the report yourself, let someone else do it (or “something” more… tech) and then you review it… but really review it. Often, you will be able to see a bunch of things before you send the report and thus avoid unnecessary discussions.

It’s good to send the report with some bullet points written by the Founders where they highlight the most important developments in that space of time.

Of the reports I receive, one of my favorites, is one that comes with three sections: “The Good, The Bad, and The Ugly”. Every month they send us a couple of points in every section. It’s an amazing format that, additionally, helps everybody to focus on the same things and row in the same direction as the Founders.

Reports save companies

Lastly, I want to highlight a very important point. As a founder, you can choose not to make a report. During good times, many can afford it.

But when things get ugly, entrepreneurs who do send their reports receive more backup from their investors.

It’s like with kids and grades. It’s not so much about the results, but the decisions made with the results. At the end of the day, when the teacher asks for an interview, surprises are the last thing you want.

Investors and funds love reports. Truly. We love them so much we even ask companies we haven’t invested in just to see how they are doing. What aunts feel when reading Vogue, we feel with Investors Update. Pure ecstasy. And believe me, it feels great to keep an investor happy.

Alejandro González Alemán is Managing Partner at Redwood Ventures, an investment fund focused on early-stage tech startups.