The Structure of an Investor Update
Investors want to be involved with your startup. They want to feel like they are part of the team and a frequent investor update are the best way to do this. Calling your investors with updates is always good and companies handle this differently.
At the very least early stage startups should send a monthly status update by email. This update should contain everything which is important to the business. It should include challenges the company is currently facing and successes the company is having. This shouldn’t be a marketing email, but rather a fireside chat with your financial partners.
As you send these emails on a regular basis your investors will steer you into the right direction of exactly what they are looking for.
These are the line items the update should cover. If you are a venture capitalist or an angel investor I would love to hear what you specifically look for in updates. Feel free to sound off in the comments.
Subject
The subject of the message should include your company name, month, and year. This makes it easy to search for the investor. By including your company name at the beginning it keeps the company top of mind for investors.
Major Highlights
This is the executive summary of the update. The major highlights should include the three most important items in the update.
Examples of Highlights:
- Lesson you’ve learned.
- Press you’ve received.
- Big customers or partnerships you’ve finalized.
Include links when relevant. Don’t only state the what, but the why. Explain why the line item is important.
Product Update
This section includes the updates you have made to the product. Include features you’ve added and why you’ve built them. You can go as deep as you want here, but it completely depends on the relationships you have with your investors. If they are technical, you should include details they care about.
Traction and Business
This is the most important section for the investor. This section demonstrates how the capital the investor has given you is growing.
Your update needs to contain traction numbers. Be careful here however. You don’t want vanity metrics here. Do not put how many new users have signed up this month. It doesn’t mean anything.
You should be including relevant numbers to your business, called key performance indicators (KPI). Depending on your business this could be things like MAUs, DAUs, viral coefficients, sales growth, etc.
Also, include any business updates including partnerships or large customers that are critical to the transformation of your business.
Investor Asks
If you have specific asks of the investors put them in here. Realize, they will mostly go unanswered.
People are busy and investors are people too. If you need something from the investor call them. This will be much more effective than asking them to do something in an email.
However, putting it in the email and then following up by phone is effective. Investors have many investments and you need to hustle your investors the same way you hustle for users.
Hiring Status
List the critical people that you are looking for. How will these people de-risk your business. Having a very clear explanation as to who you are looking for and why greatly helps. All investors are well connected. They may know someone that has done the specific thing you are looking for and are willing to make an intro.
Financial Update
The financial section includes how much money you have in the bank. How long that money is going to last at the current burn rate and if you plan on raising another round of financing.
It is important to keep your investors up-to-date with your financial numbers. This gives the investor insight into whether you need there help to raise more financing.
Investors can help you with your business. Keeping a good relationship with investors will help you with this business and your future businesses. Make sure to keep your investor updated and utilize them.