As first published in Fast Company.

So you raised your first round of funding. Good for you! Seriously, it takes a tremendous amount of work to close a round, so you should feel great about that. But regardless of the size of your round or the stage of your company, the hard truth is that you’re probably going to have to fundraise again.

Right off the bat, that's potentially bad news. Fewer deals are getting done right now than just a few years ago. According to the National Venture Capital Association, "8,000 deals were completed in 2016, representing a 22% year-over-year decline and the lowest count since 2012, a clear indication that venture investors are being much more critical of their investment opportunities." It’s particularly tough for entrepreneurs trying to make it from seed stage to Series A (the dreaded Series A crunch). So how do you compete for dollars?

The short answer: by email.

The slightly longer one: by figuring out how to engage your existing investors right now—when you’re not actively raising money. This way, when the time comes, they'll not only invest in you again, but they'll connect you with other investors and serve as glowing references in the process.

And pulling that off may come down to writing one simple email—continuously.

Why You Need Regular, Standardized Email Updates
To be sure, there are multiple strategies you can (and ideally should) use to keep your investors engaged. But one of the most important and low-effort things you can do is send out a standard group update email in a consistent format. This should happen regularly, on a monthly basis. There are startups that send quarterly investor updates, and that’s okay, but monthly is better.

Here's the thing, though: If you wait until you need to raise again to talk to your investors, they won't be happy. Investors probably won't be paying attention to your every move. And they may not respond to your update emails even if you send them regularly. But more likely than not, they are reading them. This information is how they evaluate your performance—and whether you're worth pouring any more money into.

When it comes to investor communication, put one person in charge, ideally a founder. Founders are busy too, but they should never be too busy to talk with investors. And the information you should be tracking for them should already be at your fingertips.

To marshal it into a quick, effective monthly email update to investors, you just need to follow a few basic rules:

  • Keep the format consistent. Use the same subject line so it's easily searchable.
  • Longer isn't better. You want an email short enough for an investor to read in the car from one meeting to another.
  • Stick with the same categories and metrics. Identify the ones that matter most to your business, then compare this month's stats with last month's.
  • End with one or two "asks" at the bottom. Investors are always saying they want to be helpful—let them prove it.

This is a rough template of what this type of email looks like:

Hello all,

[One-paragraph introduction sharing whatever your focus has been over the past month.]

Top priorities:
[Priority #1]
[Priority #2]
[Priority #3]

Product:
We've made [summary of latest product updates]. See them at this link.

Money in bank:
We have $[_____] in the bank. This gives us a runway of [__] months at our current burn rate.
[Any other relevant funding updates.]

KPIs:
Revenue last month: $[_____]
Revenue this month: $[_____]
[Other important metric last month]
[Other important metric this month]

Other updates:
[Big win #1]
[Press coverage #2]
[Other update #3]
[One ask for investors—in bold.]

Best,
[Name]

Still Send The Email When Things Are Going Badly
When things are going poorly, you may be tempted to skip the email updates. Don’t! Investors will know something is amiss if you stop communicating with them, and that may affect how much they trust you. Also, you waste an opportunity to engage them in finding a solution to your problems—for instance, by connecting you with a strategic hire, bridge financing, etc. If things are going badly, now is the time to fix it.

A second caveat: Don’t deviate from your structured email format when things go wrong. You may be tempted to write a long explanation for what's happening, what corrective actions you're taking, and why it’s all going to be okay. Don’t! You want to be transparent with your investors, but you don't want them to think you are becoming unhinged. And a long, rambling email will send that signal.

You Need Investors' Trust All The Time, Not Just While Fundraising
If you wait until you need something to reach out to your investors, you've already screwed up. You've just shown them you aren't capable of maintaining even your basic business network, so they should stop investing any more time and money into you. Here's how Julian Counihan at Red Sea Ventures put it: "Startups that are not speaking to their investors are throwing away a free call option. You don't know if you'll need it, but it costs nothing and is extremely valuable."

This is particularly true when it comes to bridge financing, short-term funding to tide you over until you can find longer-term investments. Bridge financing only happens on the basis of trust—and often when things are going south. At times like that, you need an investor who will take a risk on you when every sign indicates they shouldn't. To win that leap of faith, there's no substitute for regular, forthright communication.

So take the time to build trust with your investors now. It’s never too late to start writing those update emails, and sometimes a clear-cut formula is exactly what you need.

Image source: Fast Company