An investor update is a summary of the state of your business for your investors. It’s important to send updates to your investors because it’s generally in their best interest to see your company succeed. Having consistent insight into your business puts them in a better position to leverage their experience and network on your behalf.
A well-written investor update will include four sections: Overview, Performance, Economics and Needs. Each section should have two short paragraphs to provide an overview of what happened in the past month. For example, this is a good time to highlight major kudos you received, new hires, or even an open call for help. It’s also an opportunity to share your company’s financial metrics, including revenue growth, a budget for the next quarter, and cash runway.
Lastly, it’s important to be transparent and honest in your investor update. This is your chance to showcase the hard work you’ve been doing. Investors will respect you more if you share the high points and low points of your company’s trajectory. In addition, Preuss says, “Investors only succeed when their portfolio companies succeed.”
Keeping your investors updated is one of the most important things you can do for your business. Founders who regularly send updates double their chances of raising follow on funding from their investors. However, many founders struggle with creating a format that is effective and easy to write. It may take some time to create a process that works, but once you do, the consistency will pay off and your investor updates will become easier and more valuable over time.
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