Investor updates: The ‘Write’ Way to Keep Investors Invested

An investor update can be a powerful tool for startups, yet many early-stage companies fail to use it effectively. In fact, I'd say over 50% of the startups I know don't even send one.

So, why is it important to write an investor update?

The obvious reason:

Your investors have put money into your company, making this update likely the most expensive newsletter they’ve ever subscribed to. It’s their primary way of tracking how their investment is performing.

The not-so-obvious reasons:

1. It helps you reflect on your progress and gain a broader perspective on your startup’s trajectory.
2. It keeps you at the top of your mind with your investors.
3. It encourages your existing investors to preemptively back your next round—investors who see consistent progress are more likely to invest again without waiting for the next catch-up call.
4. Pro-tip: Share the update, minus sensitive information, with every investor you’ve ever spoken to, even those who initially said no. It can spark curiosity and potentially lead to inbound interest, making them more likely to join in future rounds.

Alright, if you decide to use this template or format, here are some key points to keep in mind:

1. This approach shared below is mainly for pre-seed, seed, and Series A stages—beyond that, investor updates typically require more detail, often in the form of presentation decks.
2. Nobody enjoys reading a long, text-heavy email—people skim through updates. The best way to capture attention is by including numbers and visuals like images or graphs.
3. Write the update in your own voice; let your authentic self shine through. Don’t just focus on showcasing the good things—make sure you're presenting the real picture. Investors appreciate honesty, so aim for the update to "sound real" rather than just "sound good."
4. Your cadence: Depending on who you're sharing this update with, define a cadence for sharing your updates - be it monthly or quarterly. Normally monthly updates are pretty standard, however, if you think your progress is better covered in a quarterly cadence, then you can do that. But stick by it.

Alright, now that you have the context, here's a simple format to guide you in writing your investor updates:

1. Summary

Even though you’ll write this part last, it should appear at the top of your update. This section should include the top 3-4 highlights, focusing on measurable metrics. You can provide more details in the relevant sections below. Typically, this should cover a TLDR of everything in your update:

• Any major update
• Key metrics: Your North Star metric
• Cash position: Burn rate/Runway
• Team updates: Hiring status (new hires, no changes, etc.)
• Round updates: Fundraising status (raising, raised, received a term sheet, etc.)

2. Key Metrics

This is where you let your numbers do the talking. Ideally, include a historical record, covering at least a year if your company has been around that long. Use graphs to showcase your growth; it’s the simplest and most effective way to convey progress. The specific key metrics will depend on your business model but aim to focus on 5-6 key aspects that you’re tracking.

No matter your business model, it’s crucial to identify your key metrics, present them visually, and highlight the latest month’s data. This section is often the most compelling part of your update.

You can even sit with your investors to arrive at these.

3. Goals:

It’s essential for any organization to set clear goals, whether quarterly, annually, or biannually. Share these with your investors to show how you’re progressing towards them. Focus on your top three goals, which can be either qualitative or quantifiable.

For example:

• Completing a key project
• Achieving a specific growth target
• Meeting a critical operational milestone

Clearly indicate the status of each goal—whether it’s completed, in progress, or upcoming.

4. What’s Next

After outlining your goals, provide a brief plan for the next three months. This could be a simple statement or a few lines explaining what’s on the horizon. Treat this more like your target that's going to become your next goal.

5. Lowlights:

Be transparent about any challenges or setbacks. Mention anything that didn’t go as planned, what you expected versus what actually happened, and how you plan to address these issues or what you’ve learned from them

6. Team Strength

Highlight your team’s current status: who’s been hired, who’s on board, and what roles they’re filling. For early-stage companies, include the number of founders, engineers, and the overall team costs.

7. Asks

Outline any help you need from your investors, whether it’s customer introductions, platform credits (like Google or AWS), hiring assistance, or connections with other investors. Be clear and specific about your requests.

Crafting a thoughtful investor update is a powerful way to keep your stakeholders engaged and informed. By presenting a balanced view of your progress—highlighting both achievements and challenges—you build credibility and foster trust. This transparency not only keeps investors in the loop but also encourages their continued support and involvement.

Other BFF Banter;

1. How many rupees is your trust worth?
2. Is AI cutting your costs or bringing in more revenue?

“Either write something worth reading or do something worth writing.”

Benjamin Franklin