How to Write a Great Investor Update
One of the biggest mistakes an entrepreneur can make is not communicating with their existing investors on a regular cadence. Angels & Venture Capital funds LOVE founders that are great communicators. Your startup’s stakeholders can’t help you if they don’t know what is going on! From hiring to business development intros to raising subsequent rounds, if you don’t communicate your investors either won’t know how to help or even worse, if you have been radio silent for a year when you do emerge those stakeholders won’t feel confident making introductions or investing again themselves.
I personally believe that a founder’s ability to communicate is a positive indicator of how successful their company will be. The highest-performing companies in our portfolio are universally great at communicating with us. The founders of companies worth $100’s of millions of dollars and 100’s of employees have consistently been better at providing updates than the companies that have underperformed.
The beauty is that you don’t need to write a book each month! And, these days, there are a number of tools that help you put data together and manage your recipient list. Below we are going to break down a real investor update from one of our portfolio companies. This is an excellent example of what an update should include. I could nitpick it, but generally speaking, it is very thorough. If our entire portfolio provided this on a monthly basis I would be thrilled!
You can follow along and build your own update using a template on Visible that follows this same structure.
Make sure to include your company name and the timeframe for which you are reporting!
I like this, I never did this as a founder but I think it adds a personal touch that can help make your update more interesting and build your relationship with an investor without ever having to talk to them!
WHAT YOU DO
Keep in mind that potential investors and mentors aren’t living your company. It is a great idea to remind them what you do. Usually, this is a quick 1-line sentence overview. For existing investors, it is a useful piece of information we can use to copy & paste when making an introduction on your behalf.
This is a MUST. It is the first thing I look at. Remember to pick great KPIs! The rest of the update will provide context to why your KPI’s are performing the way they are. Use graphs! They provide context on how things have changed. My one issue with this company’s KPIs is I have no baseline for their Average annual contract value. What does this KPI as a standalone tell me? I’d recommend choosing 3–5 KPIs (here’s a video on how to choose the right ones). Your KPIs can change over time, but you should acknowledge and note the reasoning behind your switch.
Be specific. General asks tend to get 0 responses. Keep it under 5. These can be specific introductions for business development, hires/open roles, or investment. If you’re asking for advice, again be as specific as you can. A great example: “We are starting to scale our sales team, would love to talk to a founder or advisor who has successfully scaled a direct sales team.”
HIGHS AND LOWS
High’s — This is an opportunity to highlight a team member, a big sale, product advancement or anything else you feel great about! Don’t be afraid to brag a little. It is also a great place to include links for any articles/publicity you have received. This can also be a separate section.
Low’s — I would include a low in every update. There is always a low. Don’t leave this blank. Be VERY transparent, no BS. Every startup has downs, if you pretend you are perfect it reduces the credibility of everything else you have written in your update.
The best way to garner support is to thank people publicly when they have helped you.
Why not? If you have them share them! Not a section you need though.
Honestly, this is a phenomenal update. There are no glaring holes. I have occasionally seen companies provide quick videos on significant product updates which can be a nice addition. I have also seen founders include quick personal notes about themselves or a team member, which can be nice.
A few final thoughts
Who should be on your update?
This is actually less obvious than it may seem. All current investors and shareholders are a no-brainer to include but who else?
I am a strong advocate of including investors that could be a part of your next round on the same update as existing investors. If you just raised a pre-seed round, then include Seed investors. If you raised a seed round, include Series A investors.
It’s not to say that you should just randomly add investors to your update list. To start, use the update as an excuse to reach out to connections you already have, give them a personal 1-on-1 update and at the end of the conversation ask if they would like to get regular updates on the company’s progress. It is also a great way to end a conversation with any new investors you happen to meet.
I recommend including active mentors on the same update as your investors, especially if they are equity incented. This will save you the time of having to prepare two updates and if a mentor doesn’t know all the details of what is going on how can they be most helpful? If you have a broader list of people you have casually met that you want to keep up to date I would redact the KPI’s from their update.
How often should you send an update?
Pre-Series A startups aren’t doing it right if they don’t send a monthly update to their investors. Post-Series A I still prefer receiving a monthly update, however I understand if a company wants to move to a quarterly cadence. Again, I don’t expect a book but I can’t help our portfolio if I don’t know what’s going on.
Finally, make sure to bcc everyone on your update or use a platform like Visible.vc. Tools like these really help keep your update easy to distribute, put together and track.