Investor Update Template
Keeping your early investors updated is probably the most important thing you can do as a startup founder. It also happens to be one of the things startup founders are terrible at!
I’ve made over 100 startup investments and to this day only about 2 of them have sent me consistent investor updates throughout the life of their company. Of course, those are mostly early-stage investments so naturally, a lot of those companies have gone out of business. Still, in most cases, they didn’t even update me when that happened! Don’t do this.
Here are a few things to think about with regard to your investor updates
Don’t overthink it. You don’t need to prepare your magnum opus. A short email with a few bullet points will do.
Consistency is key but that is up to you to decide how often to send.
For investors, no news is bad news. We hate to be surprised and would rather know even the bad news sooner.
Investor update frequently asked questions
Q: How often should I send investor updates?
A: Up to you but for early-stage startups I recommend monthly, and once you get a bit more mature switch to quarterly.
Q: What metrics should be included in an investor update?
A: Typically always revenue, plus 2 or three of your top metrics. You should also share how much cash you have in the bank and how many monthly runway that equates to.
Q: Should I send investor updates to people who have not invested yet?
A: Absolutely! Use your investor updates to keep friends and partners in the loop and share updates with every prospective investor you meet. Investor updates can be very helpful in convincing an investor on the fence to jump in.
About investor updates
To start these updates should be very very short. Don’t write a novel and don’t even prepare slides or PDFs. Text is all you need and keeping the updates inline within the email will also ensure investors are more likely to read them. I see a lot of founders get stuck or just avoid investor updates because they think it needs to be a big production when it really should not. Your investors will spend about 30 seconds reading them, so you should not be spending more than 5 minutes making them.
In terms of the structure it just contains 3 parts. The first is the opening which should be 1-2 sentences about what happened in the last month. Again there is no reason to tell them everything, just the most important changes to the business in the last 30 days. Keep it upbeat and highlight your wins in either traction, new hires, or product updates.
For the next part, you just need 3 bullet points that are your main business metrics. Things you can quantify are best and things that ideally easily show momentum. For most businesses that first metric should of course be revenue, but it might be something else like downloads or pipeline value. The next bullet point should be your north star metric, if you don't know what that means do a bit of googling but in short, it’s a way to quantify the value your product provides. For example, with Spotify their north star might be the total number of songs listened to per month. Your 3rd and final bullet point is a bit of a wild card and something highly specific to your business. It might even be something related to new hires, or perhaps a big new customer you’re working on. In the case of all these bullets put in parenthesis after each on the change month over month. I go a bit further and put this metric in green to signal to investors that shit is happening and it’s positive.
Now for the final part of the update, “the ask”. Here is where you solicit advice, an introduction, or other help with the business. As your investor network hopefully has interesting connections it’s a great way to get them engaged in the business even before they invest. An example of this might be “We are looking for a high-level contact at Facebook, please reply to this email if you can connect us”. The ask serves two purposes really. It signals what you’re doing next while also showing you’re coachable. Furthermore, it’s the best way to determine if an investor is genuinely interested in your startup. If they reply, and try to help, then you know they are. If they do that and it has been a while since you last pitched them it might be a good chance to ask for a new call and try to get them onboard.
The investor update template
Use this investor update template to keep your investors warm and informed.
Example of an investor update
Dear Investors and Friends of Instacookie,
The last month has been great for our startup, which as a reminder, is Uber for delicious pastries. We set a new delivery record, hired a new Head of Sugar, and finalized our partnership with the Diabetes Association of America.
$12K in Monthy Sales (↑23% MoM)
5342 unique pastries delivered (↑35% MoM)
Launched our new browser plug that detects low blood sugar
Next month we’ll be focused on:
Reducing our delivery times
Onboarding our new partner
Hiring a Chief Sugar Officer
We are looking for new startups that want to join our B2B office delivery service. Do any of your portfolio companies need more sugar? Please connect us, and we’ll drive up their heart rate and energy levels for you!
Thanks for reading!
Joe Sugar
Instacookie - The sweetest startup you can invest in
In conclusion
Keep your investors updated is one the easiest and highest impact things you can do for your startup. Need more help? I’m testing a service to help you by ghostwriting your startup investor updates.
It’s a bit of a secret and if you use the service that is also our little secret…
Investor Update Podcast
Before you go, you can also listen to me rant about how you can use investor updates to close your investor pipeline.
