Board meetings are a pain in the ass.
Unless you're a well funded, growth stage company that has lots of hands on deck--tons of instrumentation that easily dumps out pretty charts and metrics, or luxury amenities like, well, time, most entrepreneurs probably feel like they could be doing more productive things than telling their investors what they did last month.
Same goes for update e-mails. "Frankly, this company is duct-taped together and will be for quite a long time, and shit hits the fan just about every day. Just the fact that we're still here is a major accomplishment, but now we've got to write a rosey little story about how things are great." When stuff is actually bad, you need to find a way to say it without freaking everyone out--and in the grand scheme of things, does it really matter? Shouldn't we just mail you a check in a few years if it works, and let you know when it's a tax write-off if it doesn't?
Obviously, investors might have a few issues with that--for obvious reasons. But, why then, other than "Because we want to know what's going on," should entrepreneurs make investor communication a priority?
1) Good Investor Communication Saves Time
When you have some kind of consistant methodology--metrics you track each month, a meeting that is already booked, a repeat call scheduled, you actually take less time than dealing with individual investor queries one at a time. Investors are less likely to ping you with random stuff when they feel well informed on a consistant basis. So, from a purely selfish perspective as an entrepreneur, if you really want to deal with investors less, you'll setup a good communications strategy.
2) If Investor Communication is Too Hard, Perhaps Your Management Process is Broken
If answering questions and coming up with a review on how things are going feels like reinventing the wheel, perhaps you haven't built in all the management structures you really need to run the business from a well informed perspective. You should already be tracking key metrics and be able to call them up pretty quickly. How much customer engagement was there, what profit or loss did you make on goods sold are all of the kinds of metrics that shouldn't take more than a few clicks. The more you know about what's going on with your business, the easier it should be to tell someone else about it--so communicating with your investors once a month should be a good kick in the pants to get that stuff going.
3) They Trusted You With Their Capital--Maintain That Trust with Transparency
Whether it's their money or their investor's money, a lot of trust went into investing in you. You are how the keeper of that trust--and you can choose to do things that maintain it or destroy it. While you're not likely to do anything unethical to completely tear it apart in one fell swoop, making your company into a black box is a good way to slowly erode investor trust over time. You owe them more than that. They deserve more than that for trusting you. Transparency helps create an atmosphere of trust. If things aren't working well--that's ok if I feel like, as an investor, you're telling me how bad it is, and that you're giving me a chance to be part of the solution by keeping me informed. I may not be happy about the turn of events, but I signed up to take this kind of risk--so it is to be expected. When an entrepreneur goes radio silent, I start to worry that there's more than meets the eye, things are worse than they are, and that I *could* be helping, but I'm being shielded from the issues. It makes me feel like the entrepreneur took my trust for granted and that, while I respected their ability to run the company, they don't respect my ability to provide assistance, or find someone who can.
4) Transparent Communication Across Your Investors Gains Leverage
If you divide and conquer--updating your investors individually--you're missing out on the potential that something one investor said could inspire some thoughtfulness on behalf of another investor. I might feel one way, but if someone more experienced in this matter weighs in, they could change my mind--helping the entrepreneur to build concensus among investors. I'll have my own opinion, but I'd like to know what other investors think, because maybe someone else around the table has a better idea.
5) You Can Never Know What You Don't Know
You could be the most experienced entrepreneur in the world, but you can't know everything. Getting outside perspective is the mark of a learning entrepreneur--someone who considers other possibilities and wants more information rather than less. You still need to be decisive and not freeze in the face of information overload, but if you can get someone to check your thinking on something without it being a big production, there can be a lot of benefit--even if it just reconfirms your thinking, giving you confidence to move forward or simply sharpens up the details a little bit. Sometimes, despite the fact that you're in the trenches everyday, there's something that you've missed. That's when I'd want someone looking across a number of different companies at my side. What haven't I thought of? Ask that and you become an entrepreneur that is much more prepared to go into battle.
If you need a way to keep your investors updated, you might look into this template.