How can you determine the right amount of information to share with investors?

When you are raising funds for your startup, you need to communicate effectively with potential investors. But how much information should you share with them? Too little, and you risk losing their interest or trust. Too much, and you risk revealing sensitive details or wasting their time. Here are some tips to help you determine the right amount of information to share with investors.

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1 Know your audience

Different types of investors have different expectations and preferences when it comes to information. For example, angel investors may be more interested in your vision, team, and traction, while venture capitalists may focus more on your market, product, and financials. Do some research on the investors you are targeting and tailor your pitch to their needs and interests. You can also ask them what kind of information they want to see and how they prefer to receive it.

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Michael Deem

CEO and Founder | Venture Capitalist | Life Sciences | AI
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Investors will want to know financials. For example, they may want to know annual budgets. They may want to know quarterly balance sheets. They will want to know about fund raises, so that they can contribute their prorata share or to give warm introductions to other investors in their network.

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2 Be clear and concise

Investors are busy people who receive hundreds of pitches every week. They don't have time to read long and complex documents or listen to rambling presentations. You need to capture their attention and convey your value proposition in a clear and concise way. Use simple language, avoid jargon, and highlight the key points. Use visuals, such as charts, graphs, and images, to illustrate your data and make your pitch more engaging. Keep your pitch deck short, ideally no more than 10 slides, and your executive summary no more than one page.

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3 Be honest and transparent

Investors are looking for trustworthy and credible founders who can deliver on their promises. They will appreciate it if you are honest and transparent about your achievements, challenges, and risks. Don't exaggerate your numbers, hide your problems, or make unrealistic claims. Instead, show them how you measure your progress, validate your assumptions, and address your issues. Be prepared to answer their questions and provide evidence to back up your statements. If you don't know something, admit it and say how you plan to find out.

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4 Be strategic and selective

While you want to be honest and transparent, you don't want to share everything with every investor. Some information may be confidential, proprietary, or irrelevant for your pitch. You need to be strategic and selective about what information you share with whom and when. For example, you may want to share your detailed financial projections, product roadmap, or customer list only with serious investors who have signed a non-disclosure agreement (NDA). You may also want to share different levels of information at different stages of the fundraising process, such as the initial contact, the first meeting, the due diligence, and the term sheet.

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Michael Deem

CEO and Founder | Venture Capitalist | Life Sciences | AI
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The level of information shared will depend on the investor. Board members will receive the most. Some board members (e.g. maybe corporate venture capital) might be excluded from some discussions due to conflict of interest. Board observers will receive somewhat less information. Investors who are not board members will likely receive less information. The level of information sharing will be a key item on the term sheet and later formal documents.

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5 Be consistent and updated

Investors will compare your information with other sources, such as your website, social media, press releases, or third-party reports. They will also follow up with you and check your progress over time. You need to make sure that your information is consistent and updated across all channels and stages. If there are any changes or discrepancies in your information, explain them clearly and justify them logically. Keep your investors informed and engaged with regular updates and feedback.

By following these tips, you can determine the right amount of information to share with investors and increase your chances of getting funded.

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Michael Deem

CEO and Founder | Venture Capitalist | Life Sciences | AI
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Some investors will track information over time. The board will reference previous board decks to see how progress is being made. This is a good check on management's performance and consistency. Management is trying to build something great in the company, which is hard. Management needs to be optimistic and persistent, but also consistent over time.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you determine the right amount of information to share with investors?

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6

1 Know your audience

2 Be clear and concise

3 Be honest and transparent

4 Be strategic and selective

5 Be consistent and updated

6 Here’s what else to consider

Venture Capital

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How can you determine the right amount of information to share with investors?

1

2

3

4

5

6

1 Know your audience

2 Be clear and concise

3 Be honest and transparent

4 Be strategic and selective

5 Be consistent and updated

6 Here’s what else to consider

Venture Capital

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