When most people think of investor updates, they usually think about the quarterly results that publicly traded companies send out to investors and stakeholders. But, this practice shouldn’t be limited to just public companies. After all, going through the process of producing an investor update forces management to think about how the company has been progressing and the direction in which the company is going. It helps investors get on the same page so there are no surprises.
Great investor updates can have long-lasting effects, benefiting both the company, the investor, and the relationship between the two.
Why send out investor updates?
According to Visible, “Companies that provide regular investor updates are 300% more likely to receive follow-on funding”. Why? Because sending updates to investors makes you accountable to them. At the end of each period (whether that’s monthly or quarterly), people will be expecting to hear from you about how the company performed. This narrative tells how the company is progressing, showcases your team’s accomplishments, and lays out the plan for the future. It gives you an opportunity to explain any missteps your company made and how it’s recovering from them, along with any corresponding pivots your business has made or is planning to make.
Investor updates allow you to construct a window into your business. This is a place where you can share big wins or ask for help. It is a place where you can share specific data points that may entice future investors (if that is your goal). Investor updates are all about showing momentum while being transparent along the way. Investors invest in lines, not dots.
Another benefit of writing investor updates is that it allows you to reflect on the previous period for your own business. Ask yourself if you did what you said you were going to do. Did you get distracted? Did you surpass your expectations? These updates are a great forum for you to write a summary of what happened over the last cycle, whether it is good or bad. It gives you a chance to create a plan going forward into the next period.
What makes up a good investor update?
There is a balance between the length of an investor update and the type of information you provide. Most of the time, bullet points or one to two sentences about a particular topic will suffice. Give the recipients a high-level overview of what is going on in the business. If someone wants to know more about a certain topic, they can usually just ask. This does not give you an excuse to glaze over important data points, however, and some of the best investor updates are rich with data and commentary.
The stage of your business—whether you are pre-revenue, have a little revenue, or are well-established—will determine what type of data is even available for you to include in an investor update. Usually, the following data points are a good start. (Pick what applies to you and do not add something if it is not relevant.)
- Revenue (MRR/ARR or run rate)
- Sales funnel info (leads, demo calls, closed deals, etc.)
- Burn/runway (ideally both)
- Usage metrics (DAU, MAU)
The metrics above are merely just a sample. Be sure to include anything that is relevant to your market, business model and/or sector, or that you think is important. I have seen some entrepreneurs go the extra step and create a dashboard that shows how these metrics have improved or declined over time. Something like this can be easily hosted in a “view only” Google sheet that is shared with everybody.
In addition to quantitative data, a nice add-on is some qualitative commentary to go with it. Here are some common items I have seen that help generate some action items for the reader:
- What we need help with: Connections? Introductions? Hiring? Planning? Be open and honest in this section. It usually pays off and shows you which people are really invested in seeing you succeed.
- What keeps you up at night: Worries about missing an implementation deadline, leads are not converting, etc.
- Big wins: What went really well this month?
- Upcoming events/business schedule: Is your business an exhibitor at an upcoming conference? Are you participating in an upcoming pitch competition? Speaking at an industry event? This is your chance to showcase what things the business is doing publicly.
A section that I tend to like is your own analysis of the market and the business. This is more appropriate to do on a quarterly, or even an annual, basis. Something like this can be as long or as short as you want, but there is nothing better than knowing an entrepreneur is fully in tune with what is going on in the bigger picture. Discussion points can be notable M&A, new competition or changing competitive dynamics, any major funding rounds both private and public, and even macroeconomic trends that are evolving over time. This section is your opportunity as an entrepreneur to showcase your expertise in your market. It shows that you are able to operate on the day-to-day level as well as think about the big picture. And if you are looking to entice investors, remember that good investors are always thinking about the big picture.
Lastly, do not forget to include some fun things. This includes bullet points or short sentences around customer quotes, personal team wins, and product additions. You could even thank those who helped the business during the previous period.
How to send an investor update:
Our favorite investor updates are quick and to the point—they don’t have to be multi-page PDFs, in fact usually less is more. The common mediums are via email or through a tool like HubSpot or DocSend. Tools like Visible, MailChimp, or Paper Street are common as well. Whichever method you choose, make sure your investor update is informative, engaging, and upbeat.
Investor updates are only one piece of the puzzle that is fundraising. If you’re interested in learning more about investor updates, fundraising, and how to create FOMO during your fundraise, then our last webinar with Visible is for you. You can watch the webinar on demand anytime, here: Creating FOMO In Your Fundraise – YouTube