· Mark Davis · Operations · 10 min read
Stakeholder Communication Basics
Before you can communicate effectively, it's essential to identify the stakeholders that matter most. In this article, we'll guide you through pinpointing the key stakeholders crucial for your startup's communication strategy. Unlock the secrets to targeted, impactful stakeholder engagement that drives success.
As someone who is at the helm of a startup, you’re likely of the view that business development is your religious duty and that ensuring effective communication channels perhaps comes much later in the priority list. So why even think about it right now?
However, here’s the thing: business development needs two main elements - outreach and ability to execute. Both of these depend a lot on ensuring effective communication.
Who do you need to communicate with? Your stakeholders.
Who exactly are your stakeholders? A stakeholder can generally be described as an individual or entity holding an interest or share in a project, a business, a venture etc. A stakeholder can be internal or external and can include clients, employees, investors, as well as other segments of the corporate community. However, one needs to understand that a stakeholder is a member who can influence, be influenced by or be impacted by the results of a particular venture.
For example, in the healthcare sector, stakeholders could be the patients, medical staff, insurance providers or any regulatory agency. Naturally, these stakeholder groups’ interests and degrees of influence over the project are different and therefore, engagement with each group may require a different approach. It is essential to identify your stakeholders early on for the success of your business.
Let’s look at each of your stakeholders and examine how and when you would need to communicate with them and what’s the best way to do that.
Equity Holders
They are the first in the list, since they hold a direct “stake” in your business. If your business is shaped as a company, these are your shareholders. Most corporate laws mandate communications with the shareholders in the form of required resolutions, annual general meetings and annual reports. Given that in early stages your shareholders will most likely be your co-founders and angel investors, it’s always advisable to maintain continuous communication with them.
Your co-founders will most likely be in the management board too, but even offline, co-founders have to be communicating almost all the time, to ensure that the operations are being carried out smoothly. A particularly unwanted outcome of less coordination between the co-founders is that employees can start to take advantage of it.
Your angel investors probably have information covenants in the shareholders agreements through which they are entitled to certain ongoing information about the business. However, there’s no harm in going out and sharing little victories with them like a fantastic review from a lead customer, a significant media mention etc. Often all such things are mentioned in pitch decks at the time of fundraising, but forgotten to be informed to investors later on.
Management and Advisors
In the initial stages, you might be taking help from a lot of advisors on various aspects. It sometimes leads to the formation of a two - tiered board: an executive board of directors or a basic bod who will be involved with day to day decisions and an “advisory board”. Companies with famous advisors often flaunt this by displaying their advisory board on their website.
It also leads to a proper process where some matters are run through the advisory board for their strategic recommendations and then brought before the executive board at a bod meeting where steps are planned out for tactical implementation.
However, the effectiveness of this process depends on how matters are communicated to these forums. There should especially be proper processes to place potential business proposals and potential issues like fallouts, litigation etc. promptly before the board to ensure structured decision making and action. Else, in an absence of structure, as a CEO, someone may even end up taking impulsive decisions which can cost the business.
Employees
It’s often pointed out that managers who do not take time out to communicate with the employees end up failing. Employees will either take such a manager out to ride or will simply lose any motivation to do what they are supposed to be doing.
Lack of communication also means lack of clarity - maybe the employees aren’t even clear about what is expected of them. If you don’t take time to talk to them once in a while and understand where they are coming from, what fuels them and what frustrates them, you’re going to be unable to find out where they are likely to shine and you might end up setting them up to fail.
No one in the world can produce better results individually than they can produce as a team and especially as a business, you need to be able to bring your team with you. The communication needs to be frequent and clear.
Suppliers and customers
We knew of a smart service provider. He reached out to the customers not on their business anniversaries, but on his own, thanking them for their contribution in how far he had come in the last year. How often did you communicate with your suppliers and customers for matters important to them, other than their business dealings with you? And this, of course, does not include the once in a year ‘seasons greetings’ card, because everyone in the world does that - there’s nothing unique. Keep asking after them. Celebrate their victories. Communicate your small victories to them. It matters. A lot.
Followers and people interested in your business
For obvious reasons, no business today can disregard the importance of social media in business development.
If you only use social media handles at times where your business acquires funding or gets a licence or receives an award, you are going to be forgotten quite soon. But if you keep communicating with people in general and keep sharing events which bring you joy as a business owner, people will relate to you, understand your cause and might even turn into stakeholders later on. As Simon Sinek says, “People don’t buy what you do, they buy “why” you do it.” But unless you communicate your “why”, you’re not going to be able to convert potential customers into actual customers.
In a nutshell, it pays not only to keep continuous communication with stakeholders, it pays to keep communication continuous to convert people to stakeholders.
Determining who within your organisation should handle communication is crucial. It could be the CEO who acts as a spokesperson, the marketing team who may be involved with brand building and if the organisation is structured, it may even have an investor relations team who manages the messaging that the company wants to put out to potential investors.
In part two, we will discuss specific communication tools and strategies. We will also explore common challenges CEOs might face, such as dealing with conflicting interests among stakeholders or managing communication during a crisis. Stay Tuned!
And while you are at it, keep your communication with us too! If you implement some of these strategies for stakeholder communication, be sure to write to us about whether these worked for you! We will be eager to hear about your experiences.
FAQ
What are the five main stakeholder groups in stakeholder communication?
What are the five main stakeholder groups in stakeholder communication?
The five main stakeholder groups are equity holders (investors and shareholders), management and advisors (executives and board members), employees (full-time and contract staff), suppliers and customers (business partners and clients), and followers or interested parties (potential investors, media, and community members). Each group requires tailored communication strategies based on their information needs, legal rights to company data, and level of involvement in business operations.
How often should startups communicate with equity holders?
Startups should provide formal updates to equity holders at minimum quarterly, typically aligned with board meetings and financial reporting cycles. Many high-growth startups send monthly investor updates covering key metrics, runway, and milestone progress. According to venture capital best practices, investor communications should include financial performance, strategic initiatives, key hires, and specific requests for support. Annual meetings are legally required for most corporate structures to approve major decisions.
What information should be included in employee stakeholder communications?
Employee communications should include company performance updates, strategic direction changes, organizational updates, and information directly affecting their roles and compensation. Transparency around company health, runway, and growth metrics builds trust, though sensitive financial details may be reserved for leadership. Regular all-hands meetings, typically monthly or quarterly, combined with accessible leadership and clear internal communication channels, create effective employee stakeholder engagement. Equity-holding employees require additional updates on valuation and liquidity events.
Why is stakeholder communication important for startup governance?
Effective stakeholder communication is essential for maintaining trust, meeting fiduciary duties, and ensuring informed decision-making across all governance levels. Poor communication leads to misaligned expectations, reduced stakeholder support during critical periods, and potential legal complications. The NACD emphasizes that transparent, regular communication with stakeholders strengthens governance oversight and enables boards to fulfill their advisory and monitoring responsibilities. Strategic stakeholder engagement also facilitates fundraising, talent retention, and partnership development critical for startup growth.
The five main stakeholder groups requiring distinct communication strategies are equity holders (investors and shareholders), management and advisors (board members and consultants), employees (full-time and contract staff), suppliers and customers (business partners and clients), and followers (community members and potential customers). Each group requires tailored messaging frequency and content depth based on their relationship to the company and information needs for decision-making.
How often should startups communicate with equity holders?
Startups should provide formal updates to equity holders quarterly at minimum, aligning with board meeting schedules and financial reporting cycles. High-growth startups often increase this to monthly investor updates during critical periods like fundraising or rapid scaling. According to venture capital best practices, investor communications should include financial metrics, key performance indicators, strategic milestones, and material risks to maintain trust and meet fiduciary obligations.
What information should be included in stakeholder communications?
Effective stakeholder communications should include financial performance metrics, strategic objectives and progress, operational updates relevant to each group, risk factors and mitigation strategies, and clear next steps or calls to action. The content depth varies by stakeholder group: equity holders require detailed financial data, employees need cultural and operational updates, while customers benefit from product roadmap information. Transparency and consistency build stakeholder trust and engagement.
Why is employee communication considered critical for startups?
Employee communication directly impacts retention, productivity, and company culture, with Gallup research showing that engaged employees are 23% more profitable for organizations. Startups must balance transparency about company performance with maintaining morale during challenges. Regular all-hands meetings, departmental updates, and accessible leadership create alignment on company goals. Employees who understand strategic direction become better brand ambassadors and contribute more effectively to organizational objectives.
How do stakeholder communication needs differ between early-stage and growth-stage companies?
Early-stage companies typically maintain informal, frequent communication with small stakeholder groups, often through direct channels like email and messaging. Growth-stage companies require structured communication frameworks including formal investor relations programs, employee town halls, customer advisory boards, and public relations strategies. As stakeholder numbers increase, companies must implement scalable communication systems while maintaining personalization for key relationships. Documentation and compliance requirements also increase significantly with company maturity.
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Mark Davis
Founder, I'mBoard
Mark Davis is Founder of I'mBoard. Having served on dozens of startup boards, he knows the pains from both sides of the table - as an exited founder/CEO turned investor.
