- Posted by Marilena Kakkou
- On November 9, 2020
You’ve landed the first funding for your startup, now you’ve got to make the most of it. An important part of this is putting together a regular, powerful investor update that will keep your stakeholders informed and allow them a glimpse of your startup through the CEOs lenses. Although this looks like another commitment, great (current and future) investor management will allow you to spend more time on actually returning their investment and improve the chances of success; one of the easiest ways, from our point of view, to do this is through quick monthly updates.
This blogpost describes the reasons to send investor updates, provides some guidelines for setting them up, goes through their main components and lists some templates we found useful.
Why Send Investor Updates?
Communication — Regular communication with investors and important stakeholders is key to a startup’s success. Building a reporting cadence with your investors is a great way to promote transparency and build a relationship focused on trust. It also gives investors confidence that the CEO and founding team are open and consistent in their communications to other stakeholders.
Show progress – It gives investors a good glimpse of your company and progress, while it creates excitement about all the new things (technology, product, clients etc) you and your team are working on.
Network — Generally speaking, investors network often and are likely to have had experience both as an operator and an investor. Updates keep the company at the top of investor inboxes (and top of mind) increasing the chances for ad hoc connections, partners, mentors and synergies.
Follow on Funding — One of the biggest reasons to report to your investors is the increased likelihood of follow on funding. For some investors, maybe your last round was too early to commit – but as you grow you want to make sure you are on their active watch list. And the timing might just be right.
Recruiting— In hand with tapping into their network, investors are a great resource when it comes to hiring top talent. Between their other portfolio companies and previous experience, most investors likely know a number of solid candidates to fill a role. If they don’t have someone in mind for the job, they can at least help talk you through different candidates you are weighing for an open position.
Experience & Knowledge — If you have an ask, investors can be a great resource and can lend experience and knowledge. You may communicate specific and critical asks in an actionable way for the investors, on which they may readily follow up and assist with.
What are the Guidelines for Investor Updates?
Set a standard frequency and format for your investor updates; consistency greatly improves the reader’s interest level.
- Frequency & Length — Send updates monthly/quarterly and set a fixed date for sending them. Keep updates brief, to keep the audience’s attention and to make the task of writing one simpler (e.g., aim for 250–750 words for monthly/quarterly; and up to 1500 words for annual, if needed).
- Preparation — Draft the update 1–2 weeks in advance, to avoid missing a scheduled communication and to stay consistent. Work closely with your team to ensure ahead of time that you have financial and product indicators ready.
- Format — Use a simple email format, for ease of readability. Many investors are not going to click or view an attachment, which decreases your readership. You can also use a simple easy-to-edit template in something like Mailchimp or a similar tool. Your investor update goes to investors and potential investors — so you just keep a list of people that you want to send it.
- Transparency and Tone — Be honest about your wins and losses alike, knowing that investors may respond with difficult questions.
- Archiving — Save your investor updates. Use your prior period’s update as a template to create a new one, which is much easier than starting from scratch.
What are the components of Investor Updates?
Give your investors a snapshot of the last period, plus any changes you need to make for your future strategy.
- Highlights of Last Period — Start with a few sentences about any significant changes to the business since the last communication.
- Operations and Performance KPIs, Revenue and Growth — Give key metrics of revenue and growth, and whatever other KPIs you are tracking, plus why they are performing as such based on your business structure. Share milestones you’ve hit and those pending.
- Sales and Marketing — Report any changes to your sales pipeline, plus number of clients reached and closed. Mention any developments in your marketing, branding, and PR initiatives.
- Product — Describe your progress in product development, how you’re keeping it, how you collect market knowledge for your product iterations and how the market is showing what works and what doesn’t.
- Good News, Press, Investor Spotlights — Include positive press, client testimonials, and important hires. Plus, spotlight investors who’ve been helpful to show your appreciation.
- Asks — Call out your investors and Ask for help where you need it. Remember, your investors want you to succeed, but they need specific requests from you to be effective.
Any Useful Investor Update Templates?
Below we have laid out a collection of our favorite investor update email templates.
Hope you found this reading useful. Happy updating!