š Hey, Iām Jamie, and Iām here to share actionable advice to help you raise money and grow your startup.
You got your investment round closed. Congrats.
You think you can get back to building your startup, and forget all about VCās for a while.
But you canāt.
Your new investors, they need to be managed. They need to be kept informed. They need to be kept warm for next time.
The humble investor update is your friend.
Hereās how to do it right.
Letās get to it š
Why write an investor update?
āWriting a good update forces a founder to focus on the right things and keeps your investors engaged and helping.ā ~ Aaron Harris
Once you manage to close your investment round, you want to get back to building your company.
Thereās so much to do, keeping your investors up to date feels like an afterthought.
But writing a regular investor update should be something you prioritise, and hereās why:
Your current investors will be your starting point for your next funding round.
The next funding round? Thatās the last thing you want to be thinking about right now.
But your current funding wonāt last forever. Who will be your first port of call for future funding? Thatās right, your current investors.
Keeping them informed of the ups and downs of your startup journey is critical to building a constructive relationship.
Communication builds trust.
They might be able to help you.
You might want to hide the challenges you are facing. Donāt.
Your investors are already bought in, so they of course want to do whatever they can to help you succeed. They might be able to make useful intros for you, or help you think through some problem you are facing. Many investors (the better ones) have operational experience, so could give advice on your product.
Good investors can do more than give you money.
It helps keep you accountable
A regular investor update can do much more than keep your investors happy. It can also help you.
Keeping yourself accountable and focussed on what matters is half the battle. Well maybe not half, but itās important.
Writing is a superpower. Writing clearly is thinking clearly.
So think of your investor update like a diary for your business, and see what that unlocks for you.
How frequently should I send investor updates?
āWhen startups are doing well, their investor updates are short and full of numbers. When they're not, their updates are long and mostly words.ā ~ Paul Graham
The simple answer is to try to aim for a monthly update. Thatās long enough for you to have some news, but not so long that they start to forget you exist!
You can also send a one-off update if you have particularly exciting or timely news to share.
If this is too much for you, find a cadence you can commit to, whether that is bi-monthly or quarterly. Less frequent than that is not a great look.
Find a cadence that works for you and stick to it.
What should I include in an investor update?
āPeople often report metrics incorrectly, like confusing bookings (sales) with MRR (revenue), or they start to count activities (like customers and revenue) that are not yet implementedā ~ James Orsillo, Operating Partner at Underscore VC
You can keep your update short and sweet, you donāt need to write Shakespeare here. Bullet points are fine. Short paragraphs are fine. Highlight the key numbers that are critical to your business.
Hereās a few things you should cover:
Current cash on hand
How much dough have you got left in your company account.
Current runway
This is your projection for when you think you would run out of money, given your current spend/revenue each month.
KPIs/Metrics
What metrics are you focussed on improving? Usually revenue or users. Whatās happened since last month?
Any highlights
Whatās been happening this month? Are there any highlights you can share to show progress? You can also add shoutouts here. If an investor has helped you last month, be sure to call it out in your next update!
Any lowlights
What are the challenges you are facing? What are you struggling with? Let your investors know and ask for help!
When you ask for help, be specific and make it easy for them to help you. For example, āinstead of asking for intros to SaaS companies, provide them with a clear definition of the type of companies you want to connect [to], a blurb they can use, and a spreadsheet of all the companies on your wishlist.ā ~ Ryan Hoover
Whatās next
Share a bit about the experiments you plan to run next month. What are you focussed on?
All of these can be accomplished with just a couple of bullet points each. Again we donāt need pages and pages, just a medium length email is perfect.
What are some mistakes that founders make with investor updates?
The first mistake is just not doing investor updates at all.
Another mistake is oversharing. There are some things you might not want to share. Why? Well you should think that your investor update could end up in the hands of your competitors. That shouldnāt happen, but sometimes it does.
Can you share a template that I can use?
Here are a few templates I found that I think would work well.
Notion Investor Update Template
_Underscore.vc Investor Update Template
500 Global Investor Update Template
An idea I had whilst writing this is that you can actually do this even before you have investors. Just write an āinvestor updateā email to yourself each month with these key points and I think you will find it really helpful.
Or write it and share it with your friends and family.
You get a diary of progress that you can also use to look back on when you are pulling together info for fundraising materials. And it helps you think about what really matters and what you want to accomplish.
Why not right?
Until next time,
Jamie
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