Investor Update: Everything You Need to Know

Written By:
November 9, 2021

Raising funds from investors is a stepping stone in the startup journey. It is the beginning of your relationship with the investors. Taking it forward, you will need to periodically update your investors about key developments in your startup.

Investor update is a set of information and documents which will brief your investors about the key developments in your startup. It is a periodic summary of performance - what went well, what went wrong, the challenges you have faced, and the key asks from the investors.

It may form the basis of board meetings.

Investor updates are usually sent over emails or in spreadsheets/ppt. It could be sent once a month or once a quarter for startups.

During early stages, you should update the investor at least once a month. This ensures you are communicating all the crucial things you are doing, as there is an increased activity in startups immediately after receiving the funds.

Series C or D onwards you can make it quarterly, as things don't change that frequently.

Note that, in most cases, founders will update investors in an informal way much more frequently.

Keeping the investors informed has immense benefits from a founder's perspective. It is a means of building trust, ensuring accountability and building a network Most startups need expert guidance during the initial stages. By sending regular investor updates, the investors can help your business grow.

In this blog, we have discussed how you can regularly update the investors—who are betting on you—and nurture your relations with them.

Let’s start!

What Should You Update Your Investor About?

Be mindful of the update length. You do not need to include everything going on in the startup. If it is too long, reading the update can be exhausting. But, if it is too short, your investors may not have a clear idea of your company’s events.

In our opinion, you should write the updates under three sections: key highlights, performance metrics and asks.

Under key highlights, you can include milestones and achievements apart from the updates which builds the narrative of where you are heading.

Performance metrics keep the focus on key performance indicators (KPIs), financial and marketing metrics, actuals as compared to the plan.

Finally, there is always something with which your investors can help you. You can include those things in the 'asks' section.

The benefit of following this structure is that it conveys the major updates in a short, skimmable format while giving you the flexibility to communicate dynamic things going on in the startup.

1. Key Highlights

In this section, include the summary of major events that took place in your company during the period. It helps you build the context that you can back with numbers in the following section and justify your ask.

In this section, you can include:

Major PR activities. Did your company conduct an event that generated press mentions (like in YourStory, Inc42, etc.) for you? If so, make sure that you include links to the press release or media coverage. When something is covered by the press organically, it gives confidence to the investors; it adds more credibility to your startup. You can also highlight if your startup has won any awards.

Include visuals in the key highlights. Pictures leave a long-lasting impact on the human mind. By including links to visuals of successful events, your investors have a positive perception of your company.

List out milestones: Milestones are a part of the investors' pitch. So, as you achieve those milestones promised to the investors, you must update your investors about it.

Any of these milestones must be included:

  • Developed the minimum viable product
  • Product launches
  • Obtained market validation
  • Customer feedback/quote/review
  • Achieved product-market fit
  • Expansion into other geographies and industries
  • Turned profitable
  • Number of customers won/lost
  • Lifetime high financial/operating metrics

Key Hires: If you have hired a CFO, CTO, or VP Sales, you can brief the investors about it. If these hires have an interesting background, such as their experience in the industry, updating the investors is a good idea. It will make the investors confident about your team.

Additionally, in this section, you can include other qualitative things you have done. Remember, this section can be of big help to keep the investors optimistic about your company.

A word of caution: The key highlights should be conveyed in bullet points. Avoid writing long stories, reasons and anecdotes. At the end of the day, investors see your startup through numbers.

2. Performance Metrics

This is the most important section on the investor update. In this section, you should only include things you have achieved and not the future plans as compared to the numbers agreed with the investors. Because through these updates, you are showing your progress and the ability to deliver on the promises made.

You are not selling them the ideas or promises anymore. They trust you and that's why they invested in your startup. Selling more promises without delivering what was promised earlier can give negative signals about you.

It's better to keep the focus on the north star metric and the metrics that directly support it.

Key Performance Indicators (KPIs): Your KPI could be monthly recurring revenue, profits, new customers acquired, percentage of repeat users, daily or monthly active users. It depends on the nature of the business but you should keep the metric same in each update.

If the metric changes for every update, investors are quick to find that you lack focus or are not moving in the right direction.

Finances: You should update the investors about your company finances. These metrics could be your monthly net burn rate, how much runway you have, the top line (revenue), the bottom line (profits), losses, cashflows or any other substantial cost centre.

Marketing Performance: Marketing is an important part of your business strategy. It helps you achieve your business goals. Hence, it makes sense to include marketing metrics.

These metrics could be the traffic to the website, number of leads, sign-ups, customers won, customer acquisition cost (at a later stage and depending on the industry), lifetime value of customers, etc. These metrics will help you to communicate the startup's growth trajectory to the investors.

3. Ask for Help

When you are stuck, not reaching out to investors for help is a lost opportunity. An investor update is the right place to do that. Once you have shown your performance in the previous section, it's not unreasonable to ask investors for help.

There are ways investors can help founders beyond capital, such as hiring for a key position, connecting with large customers or helping with a legal or regulatory challenge. Also, investors like the fact that you are transparent and you value their advice.

Dan Martel, an investor who has invested in over 30 startups, advises being specific while making an ask. It should not come as work delegated to the investor or asking something irrelevant to them. It will show that you have not done your homework.

References for new hires. It would come up as lazy asking them to connect you to 15 marketing leaders or introduce you to someone who works in Fintech.

Instead, you should research first. Try to understand the investor's background and ask for something specific.

For example, "Hey Rohit, I noticed you are friends with Siddarth at Tata Steel on LinkedIn. Do you mind making an introduction?"

More capital: Updates are a way of being in touch with your investors. The more connected you are with your existing investors, the better your chance of networking with other investors.

Your investors can introduce you to other potential investors or give confidence to other potential investors by reinvesting during the next funding rounds.

Often new investors look at your existing investors before making an investment decision. It gives the market a positive signal when your current investors reinvest in your company.

As you can see, making these reports could be time-consuming and cumbersome. So, it's better to prepare 1-2 weeks in advance before sending the update. Having a fixed format can be a time saver.

The advantage of a standard template is you need not write the email from scratch every time. You can fill in the space with the required data. Also, it is easy to delegate the task of drafting the email by keeping a reference.

A consistent format for every update also makes it easy to scan through. Different investors can easily access any information that they are looking for.

You can also send these updates to your employees. It helps to communicate the business priorities and keep the team aligned. If your team knows what commitment you have made to the investors, they will support you and give their best.

Never Miss to Send any Update

Remember that the startup world is full of uncertainty. When things take a negative turn, the default state for many founders is to skip the update. They don't want to communicate the bad news. Maybe, the results are not as expected or what you have promised to the investors while raising money. There is a high temptation to wait till you have fixed the problem or there is good news.

But we think you should never go silent, even when there is terrible news! A short update is better than no update. And knowing the bad news is better than not knowing anything. These are the times when you need the investor's help.

An investor's experience can help you deal with the founder's problems. Most of the time, they may have been through similar situations in their founder's journey or may have seen something similar in their portfolios.

Jason Calacanis, an angel investor and the author of the book Angel, says that missing 2-3 updates in a row gets the investor worried. It's a sign that the startup is going out of business. He says, "When investors see a known person on the cap table or if they have heard about them, they are going to call your previous investor. If the previous investors are informed and jazzed up, it makes it really easy for another rich person to invest money in your company."

"If the other person says, 'I never hear from the founder,' what impact do you think that has on downstream investors?" he adds further. Keep in mind that every 18-24 months, you are most likely going to require capital for your startup. So, the last thing you want is to keep your investor in the dark. If you keep healthy and transparent relations with your investors, it is highly likely to come from them.


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