Crafting Valuable Investor Updates: A How-To For Startups

Emilie Pires
5 min read
Crafting Valuable Investor Updates: A How-To For Startups

If you think your relationship with investors ends after securing funding, think again. You have a long road ahead filled with discussions — not just about an investor’s eventual ROI but also about your business and what you need to succeed. The primary tool fueling these discussions and building a relationship will be your investor updates.

Investor updates for startups are much like other types of investor updates — they keep investors informed and help you maintain a clear view of your progress. The only distinction is that startup investor updates may not always be business as usual. Startups are more volatile and have growing pains, and those pains will be evident in your updates. Experienced investors will expect this, though, so don’t be afraid to share your challenges.

Of course, investor updates may vary based on your line of business, but they largely abide by the same principles and cover the same type of information. Keep reading to see what you should consider including before drafting your first update.

Investor Updates For Startups: 4 Considerations

1. The Investor Perspective

Imagine you give someone $100,000 to ramp up their startup and eventually generate a (hopefully) lucrative return on that sum to make your investment worthwhile. Fast forward six months, and you realize you haven’t heard a peep from the founder or anyone else at the startup since you signed that check.

How does that silence make you feel? Confused? Anxious? Perhaps even angry?

Any of these feelings would make sense in this scenario. After all, you have a vested interest in the company. You want to know how your financial contribution is helping the company grow and pushing your investment toward being profitable.

As a startup founder, keep this perspective in mind if you ever start doubting the necessity of sending updates.

2. The Investor-Founder Relationship

Nurturing your relationship with investors is essential. View investors as partners that do more than dole out capital — they often have a wealth of knowledge, experience, and network connections.

That’s not to say you can’t ask for more money — you can and should if warranted, such as securing participation in your next funding round. But also ask for help with business strategy, hiring new employees, product design feedback, leveraging an investor’s network, and even customer referrals. 

For example, if you’re a founder who lacks technical expertise, you can turn to an investor with engineering or development experience for guidance on road-mapping your products or vetting technical candidates.

While investors financially want you to succeed, remember they typically have several other companies in which they’ve also invested. So it’s important to regularly provide informative, compelling updates to motivate investors to prioritize your requests.

Such priority can come in handy when a key investor has other portfolio companies that offer similar products or operate in the same geographic area as you. You’re competing for the same resources, and your timely updates could convince the investor to send an ideal client or top talent your way first.

The more invested they are in your business — beyond signing checks — the better your chances for success.

Just keep in mind that, as your business partners, investors should be privy to both the good and bad parts of your business. Resist the urge only to share the good. Not only do investors deserve transparency, but providing it builds trust.

Failing to deliver honest investor updates diminishes that trust and risks alienation. You’ll find it harder to get a “yes” from investors regarding even simple requests. It could also harm your reputation, making it difficult to get funding from other would-be investors.

With investors, your success is their success, so make it a priority to keep them in the loop with transparent reporting.

3. The Non-Investor Angle

Investor updates aren’t only applicable to those who have financially contributed to your company. Sending investor updates to non-investors can be a useful tactic for establishing a solid relationship with a key stakeholder such as a board member.

Another prime reason to loop in non-investors is if you’re courting them to become an investor. Before you established your startup, you had to convince people to invest in an idea or prototype. Now that you have actual market validation, financial results, and investor confidence to showcase, consider how much easier it would be to persuade someone to open up their checkbooks when you need a cash infusion.

4. The Management Of Investor Updates

If you’re considering outsourcing the creation of your investor updates, don’t. You should always handle these updates internally.

We’re not saying you shouldn’t outsource certain aspects — for example, if you work with a CPA firm that handles your accounting — but you should definitely pull together the financials and information from the various functional areas, and send the finished product yourself. 

Creating an investor update template can make this process more seamless. Here are a few tips:

  • Be consistent. Will you be sending investor updates as presentations, Word documents, emails, or in some other format? Will you send a monthly update or quarterly? Will they always come from you? Whatever you decide, stick with it each time.

  • Be considerate. Investors are busy, and chances are they’re reviewing multiple investor updates every month. It’s okay to be detailed, but be sure to provide clear highlights so they can intelligently decide where to dig into your report.

  • Set clear expectations. What exactly will investors be learning about in your updates — financials, growth metrics, new hires, product developments, or all that and more? Make it clear what questions you’ll be answering.

  • Set internal deadlines. The quickest way to get off track with your updates is to assume your employees consider them as important as you do. Make updates a clear priority by setting an internal deadline each cycle.

Investor Update Template: 5 Key Sections

Not all updates will look the same. However, the below investor update example offers a great starting point for building a template.

Remember to keep the update concise so investors don’t lose interest or get lost in the details. Your updates may become more detailed as your operations become more complex — and they may vary month to month as you reconfigure pricing or launch new products — but always try to distill this information into easily consumable chunks.

1. Summary

As with any important business document, start with a summary. In a few paragraphs or sentences to give investors the most important highlights from each section.

Did you get a slew of new subscribers, onboard a new talented developer, or launch a new highly requested software feature? Perhaps you saw a sharp decline in month-over-month revenue or identified a new bug that impacted half your user base? Whether positive or negative, share information you know they’ll want to see.

2. Financials & KPIs

KPIs are of interest to every investor, but deciding on which KPIs to share may be a challenge. Get input from your most dedicated investors on what they want to see and then decide accordingly. Whatever KPIs you include, stick with those — remember consistency — so investors can easily compare progress from update to update.

A few key metrics you may see fit to share:

  • Revenue. SaaS startups may use monthly recurring revenue (MRR) — predictable revenue you expect to receive every month, typically from subscriptions.

  • Run rate.  An estimate of your annual earnings based on current monthly or quarterly data.

  • Customer growth. The rate at which you gain new customers.

  • Customer churn. The rate at which customers stop using your product or service.

  • Number of active users. Particularly for SaaS startups, report how many users are active every month.

3. Product Updates

Whether it’s a product launch, redesign, or significant update, let investors know what’s going on with your main revenue generators. Maybe you’re considering phasing out a product due to low market interest or quality control issues. Putting this information on their radar can avoid surprises or even present an opportunity to revive the product.

4. Team Updates

Is your team growing (or shrinking)? Are you creating new roles? Did you make new key hires? Are you experiencing higher than expected turnover?

Give investors the rundown on the state of your team. Even if you don’t plan to hire for a new role for a few months, keeping investors informed of your intentions can help them identify potential candidates in their network.

5. Call To Action

Your final section should be your call to action (CTA) — ask for whatever help you may need from your investors. This may be requesting referrals for new business, finding a suitable COO, identifying a more reliable vendor, or any of a myriad of requests that your investors can address with their expertise or network.

Investor Update Email Example

Paint a clearer financial picture in your investor updates with Zeni.

Keeping abreast of your company’s financial health and passing that information to investors isn’t a simple task. One way to stay on top of your finances is with Zeni, an AI-powered finance concierge.

We combine cutting-edge technology with professional human expertise to help you overcome common startup accounting and bookkeeping problems and provide up-to-date information about your company’s finances in real time so that you can make informed decisions more quickly

With Zeni, you can also streamline investor updates with:

  • The Zeni Dashboard. Get a clear picture of your cash balance, burn rate, and revenue sources — all updated daily.

  • Investor View. Give your investors a high-level, curated view of specific financial data that they can access anytime. Many investors love the ability to keep tabs on your finances without waiting a month (or quarter) for the next update.

Schedule a consultation with us to go over to learn more about our bookkeeping and CFO services.

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