June 09, 2023 | by ProviderCFO
Providing investor updates is an essential practice for startups and established businesses alike. These updates are critical to fostering trust and maintaining strong relationships between companies and their investors. This article will explore the importance of writing investor updates, how often you should send them, and what information should be included.
The importance of regular, consistent investor updates cannot be overstated. Investors want to know what is happening with your business and keep informed of your progress, successes, and setbacks. If you don’t communicate with your investors, they won’t know how to help you, or worse, they may lose confidence in your ability to lead the company.
Many VC firms and investors have a portfolio of startups they support, and it’s up to you to stand out from the pack. And by keeping them informed, you can also tap into their expertise and leverage their networks to help your startup succeed. Engaged and well-informed investors are better able to provide valuable advice and are more likely to provide additional funding or provide introductions to other potential investors if needed.
The frequency of investor updates is based on the stage of your company and the preferences of your investors. Early-stage startups often benefit from sending monthly updates, as developments can occur quickly, and investors may require more frequent communication. As the company grows and stabilizes, quarterly updates may become more appropriate.
Consistency is key. Regardless of the frequency, it is essential to establish a regular schedule for sending updates and adhere to it.
A well-rounded investor update should be concise, informative, and address several key areas. While the specific content may vary depending on your company and its industry, the following sections are typically included:
1. Executive Summary: Begin your update with a brief overview of your company’s recent progress, achievements, and challenges. This section should highlight the most important information and set the tone for the rest of the update.
2. Financial Metrics: Provide updated financial data, such as revenue, expenses, customer sales, cost of acquisition, cash burn rate, runway, and other metrics important to your business. It helps to provide investors with a consolidated view of the metrics on one or two pages that show current and historical values. This enables them to quickly and clearly understand the company’s current position.
3. Product and Service Updates: Share information about new product or service launches, feature improvements, and any other significant developments related to the company’s offerings. This section demonstrates that the company is actively working to enhance its products and services, which can be a strong indicator of growth potential.
4. Milestones and Goals: Outline the company’s recent milestones and goals for the upcoming period. This section should communicate what the company has achieved and aims to accomplish in the near future. This information helps investors understand the company’s progress and the direction it is heading.
5. Challenges and Solutions: Address any recent issues or challenges the company faces and how they are being addressed. Your investors may have valuable input on current issues. Also, if an issue becomes more significant, investors are not blindsided.
6. Team Updates: Share information about key hires, promotions, or departures. More importantly, let your investors know about positions you need to fill. They may know just the perfect candidate.
7. Asks and Opportunities: Clearly articulate any specific requests for assistance, such as introductions to potential customers or partners, advice on particular challenges, or additional funding. Providing concrete examples of how investors can support you and the company further strengthens the relationship and encourages engagement.
8. Gratitude and Acknowledgments: Express gratitude for the investors’ support and acknowledge any recent contributions they have made. This gesture fosters goodwill and demonstrates that you value their partnership.
Managing investor relationships can be stressful, but keeping them well-informed can help immensely. You can build trust, demonstrate accountability, and showcase your company’s progress by providing clear, informative, and relevant updates consistently. More importantly, the knowledge, resources, and connections that come with each investor can be an incredibly valuable asset. Regular updates show investors where they can help beyond the capital they provided.
This article provides a brief overview of investor updates and is not a substitute for speaking with one of our expert advisors. If you have questions or would like to discuss fundraising and investor relations, please contact our office. We’d be happy to discuss your unique situation.
Call us at (763) 354-1113 or fill out the form below and we’ll contact you to discuss your specific situation.