On investor updates
A quick guide to a task we all hate, but makes everyone better.
There’s no proof that sending regular investor updates improves a startup’s performance. However, it’s also a borderline VC meme at this point that it seems to be correlated.
Sending regular, good quality company updates
makes it easier to raise your next round,
makes it easier for your existing investors to help you, and
helps proactively flag issues in your startup
Sending regular updates is ESPECIALLY important when things are not going well. It’s tempting to bury your head in the sand or spend the limited hours trying to put out fires, but this means that
existing investors just get more stressed and think what you’re hiding is worse than reality, and
existing investors can’t help lift some easy issues off your plate or support you in the difficult problems.
Sending updates helps YOU the founder and helps keep investors off your back when they invariably come back and ask for an update in the most inopportune time.
Before I jump in with the specific template for investor updates, a few general points.
Approach
Keep the language succinct, and the metrics consistent across updates.
Consistent means that you calculate the same metrics the same way across multiple updates. For example, if you didn’t include service revenue in sales last time, don’t include it now. If you counted employees as total headcount last time, don’t use FTEs this time.
Any change in metrics should be flagged in advance and explained clearly.
Tone and format
You can be formal and professional, or you can be casual and use emojis.
Both can work well - as long as the founder is consistent across time and across all of their communications. I have a slight preference for a more colorful approach for aesthetic reasons (more images and more color helps break up the text and make the update more engaging), but it’s ultimately a stylistic call that should be congruent with the founder’s personal style and with industry norms in the startup’s specific sector.
Charts work well to show trends over time but are not mandatory. If you find yourself spending hours on formatting investor updates, go back to first principles and simplify.
Personalization
It’s nice to send this from a plugin or platform that will help add the recipient’s name, but it’s not worth spending the time as an early stage founder unless you’re already using a CRM linked to email for other aspects of the business.
Goals
Some companies have an explicit goals section, others work it in to each section (for example, putting in budget revenue for the next quarter under Metrics). Either is a valid approach - but once again, you need to be consistent.
Frequency
The best frequency is a frequency you can maintain. Once a month is great but it’s better to write once a quarter and do it every quarter, than email 5 times in 6 months and never be heard from again.
Template
Subject: [Company] Investor Update - [Month Year]
Dear [investors/advisors/friends],
TLDR: We [closed XX new contracts] with [$YYm ARR and ZZ new users]. We’re scaling up [Important Product Initiative]. We also [Closed Impressive New Key Hire - linked to a LinkedIn URL and social media post]. [Me/Co-founder/Other Significant Employee] had a major life event — [Wedding/Baby/Marathon]. (Full disclosure - I recycled this heavily from Micah Rosenbloom of Founder Collective’s incredible post on the topic)
Reminder: [company 2 liner goes here, INCLUDING the company name linked to the company’s website]
Then the real update starts. In this opening paragraph, insert some general management commentary. This will change from month to month but some relevant aspects to cover are general market conditions, general customer budget and appetite shifts, high level capital structure updates (are you preparing to raise another round?), and key business changes.
Some possible layouts for this 1-2 paragraph management commentary piece:
“What went well” vs “Challenges” this period.
A speedrun through key metrics - e.g. “revenue is up 3x this quarter with no growth in gross burn”.
A comparison of performance versus both historical goals and future goals (including updates to budgets).
Asks
Always include 2-3 asks for your investors and supporters, and make them easy to action. If you’re looking to speak to potential customers, name the customer(s) and the title of the connection you’re seeking. Consider linking to the LinkedIn profiles of a few specific examples.
Potential asks are assistance with key hires, key customer introductions, and promotion of upcoming events and initiatives.
If you’re asking for help with key hires, ALWAYS link to the job description for the role to get better qualified candidates. (Hat tip to Hari Raghavan for this suggestion!)
Be creative with asks. Lots of founders just write the same "please send us engineers!" request every month, but investors get tapped out on that quickly. (Hat tip to Leo Polovets for this suggestion). A more reliable way to get help is to ask for things that are not zero-sum, such as referrals for an informational interview, or an introduction to a channel partner.
Keeping this at the top means it’s more likely to get actioned even if the reader doesn’t scroll down.
Metrics
Revenue:
Monthly gross burn:
Cash in bank:
Remaining runway:
Churn/renewal rate:
Other potential metrics include user count, logo count, recurring vs total revenue, sales pipeline totals, pilot count. Be judicious about what you include because you will be stuck with this metric.
People
Total headcount:
Split this by contractors and full time if this is relevant to your business model.
Key joiners:
Link to social media posts about the public hires so investors can help promote the content.
Key departures:
Include commentary on the regrettable departures and the driving causes.
Next update
Tell readers when to expect the next update from you, and to keep to this timeline.
Thanks or an Easter egg
Add a section where you thank the investors and advisors who helped since the last update. You’d be surprised at how much this can drive engagement with the Asks - use dopamine hacking to help you!
Consider including a little treat - a funny picture, a blog post you found interesting, or a photo of the last team offsite. This will also help keep investor interactions nicer, too.
Huge thank you to Hari Raghavan, Leo Polovets, both Sheel Mohnot and Jake Gibson of Better Tomorrow Ventures, and the awesome founders of the Techstars Miami Fall 2024 cohort, where I am VC-in-residence, for their input, guides, and real life examples in putting this together.