We’ve all heard horror stories of investment opportunities turning bad. Managers withheld important news and information from the investors or something came to light way too late down the road. For example, a few years back Volkswagen had involvement in a massive scandal after a discovery that they were falsifying the diesel emissions. Their investors and stockholders took a massive hit, in addition to completely losing trust in Volkswagen.

As the managing member of the opportunities we bring to our network, my fiduciary responsibility is not the same as that of publicly traded stocks. But nevertheless we have an ethical responsibility to communicate with and inform investors. And this includes when things are not going as perfectly as we expected or had outlined.


Communicating News to Investors: Both the Good and the Bad

The question is, where do you draw the line between what is a day-to-day hiccup versus when you need to inform and update investors. Our team has weekly meetings where we talk about projects and give updates. However, I’m not going to share every minute detail with our investors. That would be tedious and frankly, it could be annoying.

In any case, my inclination is always to deliver “bad” news sooner than later, especially if there is a risk they might find out from another source. Yet, everyone’s level of what is “bad” news and what’s a big deal and what is not varies.

I always err on the side of caution because I’ve been on the other side of bad news.

For example, in a project where I am only an investor (no management duties whatsoever) we expected to receive returns by the second quarter of 2019. It’s embarrassing to say that the project had fallen a bit off my radar and I’d forgotten when I should have received returns. But I knew things were running behind. Fast forward to a few weeks ago, I got a call from another investor that returns were not coming in on time. That’s nearly 9 months later than we anticipated with virtually no communication, and it didn’t even come from the operator! That kind of thing has happened numerous times to the point where I have to reach out and ask for information because otherwise, I wouldn’t get it.

As an investor, I’ve learned from those mistakes and it’s made me conscientious and diligent in updating our investors. I won’t make those same mistakes with failing to communicate. I let people know things early because that’s what I would want and expect.


How We Handle Delivering News to Investors

Typically, my team sends email updates to our investors, but in certain situations I also like to do video recordings. I think they are more personal and effective for conveying information.

We’ve sent out videos of groundbreaking ceremonies and expert reports from our skillful team members. And even a “what if” video where I outlined some risk management plans in the event I were to be hit by the proverbial bus. I like videos because they’re the next best thing to actually be in the room with somebody.

Currently, I’m getting ready to send information to our investors of the Fultondale (self-storage investment opportunity) project. We’ve been experiencing exceptional volumes of rain which have changed the course of our construction schedule. I am going to let our investors know how we are mitigating the potential changes to our schedule. We will also update them on what we will do if the timeline needs an adjustment. In all honesty, it probably wasn’t an update that I needed to give. But, I felt it couldn’t hurt to be overly transparent. I also invited them to contact our team and ask more questions, should they wish.


My question to you all, as our readers is, how do you like to get news on a project? What’s important to you when it comes to investor communication? We’d love to hear your feedback on both the good and bad.


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The When and How of Delivering Bad News to Investors
Investment opportunities may come and go, but no one likes hearing bad news about them. Here we discuss how we deal with proper communication to investors.