76. Investor Updates: how, why, and an investor update template
YouTube version
As you build your startup, you will need to keep people in the loop about how your business is growing. Investors will want to hear how their investment is performing. Potential investors want to see that you are hitting your goals and executing effectively. Advisors need to know how they can help.
Ensuring everyone has visibility into your company helps with fundraising, networking, hiring, and more. Most of the people who will receive your updates are supporters who want you to succeed, but they can only help if they know what you need.
The best tool for keeping everyone informed is regular investor updates.
There is no reason to reinvent the wheel with your letter. There are many good examples available. I took elements from the best emails I receive from companies I follow to create an investor update template you can use for your update.
I encourage founders to start writing and sending updates early in the startup process. Whenever you talk to someone about your company, ask if you can put them on your mailing list. You never know who will have the knowledge or connections you need later.
At first, you should send out your updates monthly. Once you get past your A-Round, you might consider reducing the frequency to quarterly, but not less. If you let six months or a year pass between updates, the recipients may have forgotten about you and lost track of what you are doing. Their ability and motivation to help rapidly diminish when they don’t get regular reminders. I interact with hundreds of founders, and it can be challenging to keep them straight.
Please keep your updates focused and concise. Few of your recipients have time to read long narratives about your company. Your updates should be skimmable and highlight all the critical information. Also, use the same structure for every email. Make it easy for your readers to see your progress or setbacks by sharing the same data points each time.
What to include in your updates
TL;DR (too long; didn’t read)
For the benefit of your hyper-busy or short attention span readers, which is almost all of them, start with the one thing you need them to know. If I only have a few seconds to glance at your update, at least I got this one significant bit of news.
This “one thing” could be some critical need for help or advice, announcing your new round, a big announcement, a key hire, or the like.
Elevator Pitch
Next, include a one or two-sentence description of your business. Too many company names sound similar. I often struggle to remember what your company does. A quick reminder will let me identify you, and the other details and history of our interactions will come flooding back to mind.
Dashboard
Next, I want to see a set of high-level initiatives that you are tracking month after month. They are often things like your runway, team, fundraising, product, customers, and retention. They should be specific to your company and stage. The set of things you track should change very slowly. I want to see the same data points in each update.
Rate each item on a scale of 1 to 5, and compare that to the score from the last update.
If you just filled out some critical slots in your team, you might give “Team” a five, up from a two before making those hires. I can immediately see that you don’t need help in that area now and are executing effectively on that aspect of the business.
Along with each score, include a sentence or two describing why the score changed and any context I should know.
Additionally, include some of your quantitative key performance indicators. Again, these will be specific to your startup. They could be related to total active subscribers, sales pipeline, revenue, customer acquisition costs, or whatever other numbers you are using to steer the ship.
I strongly encourage you to include graphs of these numbers. It is the easiest way to quickly show your progress and trends.
News
Next, share the most important news about your company. Were there any big wins or losses? Did you hire or fire a key employee? Have you closed any significant deals or partnerships? Are you launching any new strategic initiatives?
If you discussed plans to do something in an earlier update, let everyone know how that turned out.
Share both the good news and the bad. Without a complete picture, we can’t help as well as we might. We also know that startup news is never all good, so if there are never any negative notes, we will know you are holding back.
Ask
Finally, end your update with some specific requests. Your mailing list should have a diverse set of people with a range of strengths, networks, and experience. Spend some time thinking about all the kinds of help you could use from your supporters right now. Most of these people have warm feelings towards you and want to help if they can.
Some common requests are:
Investment
Introductions to other investors, either any investors or specific individuals or VC.
Introductions to potential hires
Suggestions for contractors, vendors, or partners
Advice
Hands-on help
Feedback on pitch decks, websites, or other materials
Sharing sensitive information
Many founders worry about sharing too much information. In my experience, most founders under-share rather than over-share. Everything should be on the table except for trade secrets and sensitive HR or legal issues. Even without an NDA, savvy investors and advisors are cautious about how they handle your information. Inappropriate sharing would cause severe damage to their reputations in the startup community. Take care to only include quality people on your mailing list; it should not be open to absolutely anyone.
Template
I created this investor update template based on the best ones I have received over the last few years.
Feel free to use, alter, and share as you see fit. If you have suggestions for improving it, please let me know in the comments. If you use this template, share how it worked for you.
Until next time. Ciao!
