What You Should Know About Investor Updates

 A lot of founders think investor updates are a chore, so they’ll either issue investor updates begrudgingly or only when the need arises, i.e., when the next investment round is on the horizon, and they want to get their investors motivated again.

That's entirely the wrong attitude to take about the value of investor updates, although it's probably because many founders don’t think of investors as partners whose financial support enables them to pursue their dreams. Instead, they see investors as a necessary evil and believe that keeping investors updated with reports and analyses is an inefficient use of their time. Those are the founders who think their energies will be much better spent focused on the development and implementation of the product or service their investors have invested in, not wasting valuable energy keeping their investors updated on progress. It's a very short-sighted view, and in our experience, they may eventually come to regret it.

Don’t be one of those founders.

The Top 5 Benefits of Investor Updates

• Investor updates are an important way to improve your investor relations by keeping your investors informed and happy.
• Regular communications are an invaluable way to ensure your startup stays front-and-centre in your investors' minds so that they won't forget about you and stay focused and enthusiastic about what you’re doing.
• They are a surefire way to build a trustworthy relationship with your investors, so you can call on them for help and assistance and benefit from their experience and insights.
• Investor updates will encourage current investors to inject more money into your business when the time comes.
• When these updates are reworked slightly for a more general audience, they can also be an excellent way to keep non-investors notified about your progress, so they’ll be much more likely to invest in your business in future rounds.

The other way to think about it is this:

As a founder, you should already keep track of your key performance metrics to ensure your startup stays on target. When you produce an investor update, all you're doing is formalising those metrics in a simple report and using them as an opportunity to show investors how hard you're working and how well you're progressing. An investor update isn't just a report; it's a beneficial PR exercise.

How often should you produce an investor update?

Monthly seems to be the best rhythm. Anything more than monthly will not only dilute the impact of your figures, it will probably turn investors off because it's stuffing up their inboxes with something they don't need to see. Don’t keep your investors updated just for the sake of it. Make sure that every investor update you produce contains the relevant information your investors will look forward to receiving.

What should a monthly investor update include?

• Your top-level performance metrics and simple analysis of why they’re better or worse than expected.
• What do those performance metrics mean moving forward, and where you will go from here.
• Your goals for the month ahead.
• An update on the goals you highlighted last month and a brief breakdown of what you’ve accomplished and what is still outstanding (and why.)
• Any other important news you want to share.
• Any request for assistance or introductions on specific tasks.

It’s important to remember that an investor update shouldn’t be a ‘we only report the good news’ newsletter. Your investors know it’s an uncertain road you’re taking, and they’ll understand when things aren’t going so well as long as you can reassure them you're taking corrective action to put it right. If you fudge your investor update to include only the metrics that make you look good, your investors will quickly suspect there's something not quite right about your figures. Be honest, proactive, and solution-focused when things don't go according to plan. Your investors will respect you for it, and your relationship with your investors will grow stronger because of it.

The quarterly investor update

Every quarter, invite your investors to a video-conferencing meeting on Zoom (although other video conferencing apps are available!).

The quarterly investor update meeting should:

• Last no more than 45 minutes.
• Follow the same format as your monthly investor update email, except this time, you’ll talk about your business and performance metrics from a 90-day perspective.
• Reinforce your vision, update your investors on the bigger picture, and remind them what your moonshot targets are.
• Let them know when your next investment round is on the way and keep them motivated to get involved.

A final bit of insider advice

Here's a pro tip that's proved highly successful for many of our clients:

• Take your monthly investor update and rework it into an email for general consumption.
• Only include the positives and successes.
• Cut out anything that’s overly sensitive.
• Keep in your requests for help and support.
• Send it to everyone who's supported you on your journey so far, even if they've only been able to help you in a minor way. Also, send it to all the investors you approached who didn’t invest in your last round of funding.

This is a speedy and simple way to keep your network updated, maintain their support, and prime them for your next round. Even if they still don't invest in that upcoming round, loyal fans can often convert into loyal customers when it's time to take your product or service to market.

Want to find out more about becoming an investable entrepreneur? You can download a free copy of my best-selling book, ‘Investable Entrepreneur’ here.