How to write great investor updates
(#3) Hey founders: you do send investor updates regularly, right?!?! (Included: an easy Google doc template for great investor updates)
At this point, founders know they should be sending regular investor updates. Given the uncertain times ahead, these updates should be more frequent and consistent. My recommendation, particularly for early stage startups, is to send monthly updates (whereas previously you might have been sending quarterly updates, or even less frequent ones.)
Investor updates should include the good and bad. There’s no room for sugarcoating things at the best of times, but right now investors need to know if things are going sideways. Ideally some of your investors will be willing and able to help.
Be precise and concise. Be transparent. But if things are really falling apart, email isn’t the best medium for that. You’re better off getting on the phone or face-to-face, starting with your lead investors, and having conversations with them.
There are quite a few good examples of investor update templates out there. You can take a look at some examples here: 1 | 2 | 3. Below, I’m sharing a structure that I’ve found helpful, along with one thing I rarely see in investor updates.
The Investor Update Structure
Note: Most often this is sent via email; but it could be done in other formats (i.e. Notion; deck; etc.)
Overview: Provide a few sentences as an overview of how things are going. This sets the tone for the rest of the email.
Highlights: Might as well start on a good note, and focus on those things that went well. This should be in bulleted form. No more than 5 things.
Monthly Metrics: You should highlight the key metrics for the business. Cash in the bank & runway are critical. But so are the metrics that tell us if the business is working or not (i.e. sales, usage, etc.) The metrics you highlight--other than the financial ones--are dependent on the type of business you’re running and the stage you’re at.
Lowlights: Don’t bury these. Make sure you highlight where things aren’t going as well.
Product / Marketing: You can dig in a bit further on product and marketing progress, two of the key levers in any startup. When discussing either, simplify things down to bullet points, show metrics where appropriate.
Business Development / Sales: Depending on your business you may have more context to provide around business development and sales. This can be especially useful when discussing partnerships (because your investors may be able to help find more partners.) Again, keep it to a few bullet points, use data when you can.
Asks: It’s always important to include genuine and specific asks. Where do you need help? Asking for “client referrals” or “great candidates” is too broad; be as clear and precise as you can. Mix these up each month, don’t ask for the same thing over and over again.
Thanks: This is a section of the investor update that I rarely see. It’s a list of “thank you’s” to investors for their help in the previous month. You might be thinking, “Ben, how much do you really need us to stroke your ego?” But it’s not just about appealing to the egomaniacal side of your investors; it creates FOMO. Every time I see a list of “thanks” in an investor update, and I’m not on the list (because I didn’t help), I (a) feel bad; and (b) want to be on the list. I wrote more about this on LinkedIn.
Final Thoughts: You can add a few sentences summarizing things. Not a bad practice for ending these investor updates demonstrating that you know what you’re focused on and why.
A couple additional thoughts:
You can add visuals--they’re helpful at synthesizing information more quickly
You can add a deck--but I wouldn’t expect most investors to dig in deeply; still this can be helpful for providing more information; perhaps something you do quarterly and not monthly
One last idea: I get a few investor updates where they end with a section titled, “What does X do again?” (X = startup). This might sound a bit silly, but I actually find it helpful. Investors with larger portfolios may not be experts at pitching your business to others. They may have lost the plot on the elevator pitch. And if they can’t articulate what you do and why, in an easy way, they may struggle to make good introductions. So this isn’t a terrible idea to drop a brief summary of what you do (think: 1-3 sentences / 30-second “elevator pitch”) at the end of each update.
I’ve put together a simple template (Google Doc) for anyone that wants to copy and paste the investor update email structure.
Bonus: Why is adding a “Thanks” section so effective?
I mentioned this briefly above, but let me expand a bit more. I find the “thanks” section (thanking investors for their help) is very engaging. Why?
Investors are humans. Humans want recognition (not all of them, but many of them.) And most humans have egos. Investors probably rate disproportionately high in both categories.
It helps connect the investors. Many investors in a company don't actually know each other; they don't collaborate & work together, which seems nuts, because they could probably help their portfolios even more. But investors often have very big, loosely held networks (and then relatively small, close networks.) So even if multiple investors are in your startup, doesn't mean they actually know each other or collaborate.
It reminds the startup about who is actually helping. It's not always the investor who has written the biggest check. I know lots of angel investors in big deals that have created CRAZY VALUE for startups.
It creates FOMO. Investors should WANT to be recognized as value add, since all investors CLAIM they are value add. If I don’t get mentioned in a “thank you,” I feel like I missed out. I could have and should have done more.
I'm not going to lie - when I get investor updates with a “thank you” section it’s the first section I read. Who helped the startup this month? Did I do enough to get on the list? Hey ... I'm human. 😄
So founders, think about how you can highlight the actual value add that's being created by your investors. It'll most likely drive even more engagement (from your active and less active investors) in a positive way. (Again, make those ASKS specific, so investors have something they can do to help, not just nose around in your biz!)