How (And How Often) To Write Investor Updates
As Brené Brown said, “Clear is kind. Unclear is unkind.”
This holds true for founders sharing investor updates. The most important thing is to actually write and share them. Regularly. Your investors want to stay apprised of the company’s progress and be helpful to your team.
So how often should you send investor updates? And what should you include? This guide will go over some tips and tricks I’ve learned along the way as a both a founder and investor.
Why you should always, always, always get into the habit of sending investor updates
Investor updates are a crucial element of sustaining the relationship between your startup and its backers. Establishing a habit of regular communication does much more than just keep investors informed; it ensures that your company remains top of mind.
Clear, regular communication helps build and reinforce trust. When you share both successes and challenges, you invite your investors to be part of the journey, deepening their connection to and investment in your company's success. But this also goes beyond your current startup. Even if your startup doesn’t work out (and most do not!), the investors will remember you for being responsible, professional, and transparent.
Remember that investors, especially angels, have put their hard-earned money into your venture, and deserve to be kept in the loop. Regular updates acknowledge and respect their contribution, reinforcing that their investment is valued and taken seriously.
Plus, when investors don’t hear from you, they will probably assume that no news is bad news. By keeping an update cadence, you preempt these concerns, ensuring that your investors have a clear and current understanding of where the company stands and where it’s headed.
Habitual investor updates are a best practice, a vital component of a healthy investor-company relationship, and a reflection of your professionalism.
How often should founders send investor updates?
Some founders send investor updates monthly, some quarterly, and others not at all. As I said before, the most important thing is to send them, at a reliable cadence. And my preference is that this happens quarterly.
You are a busy founder, and no one wants these updates to take away from other priorities.
While monthly updates can offer a more fast-clipped glimpse into a company's progress, I think this level of information overload can diminish the significance. Quarterly updates, on the other hand, provide a substantive overview without overwhelming the investors or the people responsible for drafting these updates.
Of course, you can always send one-off emails for any major updates that cannot wait until the next investor update.
10 must-have elements of an investor update
Here are some items that belong in an investor update:
Friendly introduction: Start with a warm introduction, giving a TL;DR and general sense of how the quarter went. This sets the tone for the update and engages the reader from the outset.
Vision/Mission. Regularly reiterate the company's vision and mission. It’s okay to sound like a broken record here. You want your investors to know the soundbite by heart so they can share it with others
Metrics and Key Performance Indicators (KPIs). Include relevant metrics such as quarterly revenue, annual recurring revenue (ARR), gross margin, contracts signed, runway, customer acquisition cost (CAC), etc. Consistency in the types of metrics shared each quarter allows for easy tracking and comparison.
Key quarterly highlights. Share significant achievements, such as product launches or press features. These highlights showcase the company's progress and successes.
Key quarterly challenges. Discuss any significant challenges faced during the quarter. This transparency helps investors understand obstacles and how they are being addressed.
Update on the previous quarter’s challenges. It’s nice to provide updates on how previous challenges have been managed or resolved. This demonstrates progress and helps close the loop.
Team updates. Include any significant team changes, including key new hires (or departures).
Customer testimonials. Share positive feedback from customers. This helps to humanize the impact of your product or service and reinforce its value.
“How you can help”. Include specific requests for assistance, such as introductions to potential customers, product feedback, promotional support, or social media engagement. If you don’t ask, you likely won’t receive!
Acknowledgments. Give thanks to investors who have been particularly helpful during the quarter. Recognizing specific contributions encourages a culture of active support among the folks on your cap table.
A few tips for writing investor updates
Pull from internal reporting. You don’t need to pull numbers for investors separately. A well-run company should already be tracking metrics to understand performance. Take data from your internal dashboards, and add a little narrative.
Be transparent and honest. It’s okay to share your struggles! Investors know startups are not all rainbows and unicorns. Being upfront about setbacks or areas that need improvement demonstrates integrity fosters a relationship of trust and collaboration. Plus, maybe there’s an investor who can help.
Put updates directly in the email. No need to link to a google doc, notion page, or Docsend. It’s easiest for investors to read your update directly in the email itself.
Utilize bullet points for legibility. Incorporating bullet points not only improves clarity but also makes the document more engaging and easier to reference in the future.
Maintain a consistent template. By using a consistent format for each update, you create a familiar and predictable framework that investors come to recognize and understand quickly. This familiarity makes it easier for them to locate the information they are most interested in and track progress over time.
Example investor update from an early-stage startup
Dear investors,
I hope this message finds you well. As we step into the final quarter of 2023, it's exciting to share the significant strides we've made at Health Co.. This quarter has not only been about growth but also about deepening our impact in the digital health space.
Our Vision: Reinventing Healthcare Accessibility
Our mission at Health Co. remains steadfast: to revolutionize healthcare accessibility through innovative digital solutions. We aim to be the beacon that guides the healthcare industry towards a more connected, efficient, and patient-centric future. It's a vision we're proud of, and one we hope you, as our valued investors, will continue to champion.
Metrics
Revenue: We ended the quarter with $250K in revenue, up 30% QoQ. 90% of revenue is from our provider partners, with 10% from in-app purchases.
User growth: We've seen a 30% increase in active users, surpassing our target of 25%.
Customer satisfaction: Our NPS score improved to 90%.
New partnerships: Formed five new partnerships with major healthcare providers.
Q3 Highlights
Successfully launched our AI-driven symptom checker, receiving positive feedback from both users and healthcare professionals.
Secured an additional $2M to top off our seed round, earmarked for further R&D and market expansion.
Health Co. was recognized as 'Most Innovative Digital Health Startup' at the Global Health Tech Awards 2023. We were also featured in Stat News, CNN, and TechCrunch.
Q3 Challenges
As we grow, scaling our infrastructure to maintain performance has been challenging. We had several system outages we were fortunately able to quickly fix.
Navigating the complex landscape of healthcare regulations remains a focus area for our legal team.
Update on Q2 Challenges
Enhanced security protocols implemented last quarter have resulted in a robust and secure platform, with no incidents reported this quarter.
Strategies to increase market presence have begun yielding results, as evidenced by our growing user base.
Team updates
New hires: Welcomed Dr. Jane Smith, our new Chief Medical Officer, bringing invaluable experience from her tenure at MedTech Innovators.
Departures: Bid farewell to John Doe, our VP of Marketing, who has moved on to new opportunities. We thank him for his contributions and wish him well.
Why we do what we do
“Health Co.’s platform was a game-changer for my healthcare needs. Easy to use and incredibly accurate.” - Sarah L., User
“Partnering with Health Co. has allowed us to offer cutting-edge digital solutions to our patients.” - Dr. R. Gupta, Healthcare Partner
Asks
Seeking introductions to potential healthcare partners to expand our network or providers.
We value your input on our new AI symptom checker - your insights are crucial for our continuous improvement. Download it here!
Please follow us on LinkedIn and Instagram!
I want to express my sincere gratitude for your continued support. It’s your belief in Health Co. that fuels our journey towards transforming healthcare through technology.
Summing it up
Every founder should send regular investor updates. Through these updates, you're not just keeping your investors in the loop; you're actively engaging them in your startup's story. Remember, each update is an opportunity to reinforce the trust and commitment your investors have in your vision. Whether it’s sharing the highs, acknowledging the lows, or asking for a helping hand, these communications are a testament to your dedication and transparency. So, make investor updates a habit. Not only do they keep your backers connected and informed, but they also serve as a reflection of your leadership. In the long run, it is about nurturing lasting relationships with your investors and building a reputation that extends beyond the life cycle of any single startup.