Managing investors effectively is a crucial task for finance leaders in start-ups and scale-ups.

Developing these relationships can be tricky.

By ensuring open, clear communication and aligning expectations, you can maintain strong relationships with investors, keeping them informed and engaged without overwhelming them with unnecessary details.

Start with the Shareholder Agreement

The shareholder agreement is the foundation of managing investor expectations. It outlines the key terms between founders and investors, including rights, responsibilities, and expectations. It’s essential to reference this agreement when setting the boundaries of what will be communicated and how often.

This agreement is one of the first things I ask for when starting with a new business and founder.  It's also one of the first agreements I ask for post a fundraise.  So make sure you have the latest copy.  Included are you contractual obligations.

Role of Investors in Staying Informed

Investors expect periodic updates, but it's the role of the finance leader and founder to determine the frequency and level of detail provided. Use a consistent strategy for managing investors by providing concise updates, particularly during quarterly reviews or board meetings. Summarise key metrics and critical decisions, but avoid getting into operational minutiae unless absolutely necessary.

Avoid Overloading Investors with Information

Providing too much unnecessary detail can overwhelm investors and lead to confusion or unwanted questions. While transparency is important, it's equally important to filter what is shared.

Stick to high-level updates unless detailed reports are specifically requested, as bombarding investors with excessive data can dilute the message and cause misalignment.

Setting Realistic Goals

Managing investors requires setting realistic financial and operational goals. These should be based on sound data and achievable projections, aligning with both short-term and long-term business plans. Over-promising can lead to disappointment, while under-promising and over-delivering can build confidence and trust.

Communicating Clearly and Regularly

Clear communication is vital.

Schedule regular updates and stick to that schedule to demonstrate transparency and control. Even if the business is facing challenges, it’s essential to keep investors informed and show that you are addressing the situation. Your communication should be honest and straightforward, but concise.

Educating Investors

As a finance leader, your role is not only to inform but also to educate your investors. This is particularly important if you have investors who are not familiar with the intricacies of the industry you’re in. Providing simple explanations of financial data and ensuring that they understand key metrics will build trust and reduce the number of unnecessary questions. This way, investors feel included in the decision-making process but don’t feel lost or out of their depth.

Additional Tips for Managing Investors

1. Stay Ahead of Concerns: Anticipate potential issues or questions and address them before they arise. Proactive communication shows leadership and foresight.

2. Be Honest About Challenges: Don’t shy away from discussing problems. Investors appreciate transparency. If you’re facing difficulties, communicate the steps you’re taking to address them.

3. Celebrate Milestones: Keep investors engaged by celebrating important achievements. Whether it's hitting a revenue target or a product launch, share positive news to foster confidence.

4. Provide Actionable Insights: Investors prefer knowing what actions are being taken to drive business growth rather than receiving raw data. Present updates that explain both the current situation and what comes next.

5. Respect Their Time: Investors are often busy managing multiple businesses or portfolios. Be mindful of their time by sticking to concise updates, clear communication, and focused meetings.

Managing investor expectations requires a balanced approach.

By starting with a well-defined shareholder agreement, avoiding information overload, and setting realistic goals, you can keep investors satisfied and aligned with the company’s vision.

Additionally, regular communication and investor education help build trust and minimise surprises, positioning you as a confident and strategic finance leader.

If you want to make your finance career progress easier & faster, follow the steps via our Framework below:

1. Sign up to our next workshop.
2. Work with me in the Financial Leadership Foundations course  that includes monthly Q&A sessions where we can discuss all of your questions and how to apply your learnings to your current role. 
3. Download the Advanced Management accounts course to showcase your skills as a finance leader to the Founder, leadership team and the Board.
4. Book at FLF Career Planning session.