Learn How to Write an Investor Update : Crucial Tips and Samples

An investor update contains comprehensive details about the financials of your business, important hires, and client victories. When your business expands, things happen fast. Effective investor communication is essential for any startup. A fantastic chance to update your investors on important business developments, performance indicators, and strategic initiatives is presented via an investor update. However, information alone is insufficient to create a compelling update.

What is an investor update?

A document that includes financials, team updates, client wins, recent victories and losses, and key metrics is called an investor update. Though links, decks, and PDFs can also be used to communicate them, emails are usually the preferred method. Open communication between startup founders and their investors is facilitated via investor updates.

How Do Company Updates Differently Based on the Investor?

Investors can be divided into two categories: insiders who gain access to board meetings and less involved shareholders listed on your capital table.

The key distinction between updating these two investor groups is access. Conducting board meetings allows you to provide insiders with access to more detailed information, allowing you to see opportunities and problems in the finer points of corporate performance.

Enough details about your company's performance in relation to objectives should be included in the general investor update. Add whatever information you would be willing to share with the investing community as a whole.

The Best Ways to Write an Investor Update

Careful planning and incisive communication are necessary for creating an engaging investor update. Use these best practices to write updates that pique investors' interest and inspire confidence—from cutting down on details to getting them out on a regular basis.

• Write it succinctly and clearly

Getting to the point fast guarantees that investors, who frequently evaluate many company updates, can immediately understand the important information without having to sift through unnecessary material.

• Adhere to a standard format

Investors can identify and compare important data points more easily over time when updates are provided in a consistent format.

• Openly communicate any difficulties you may be having

 Taking on challenges head-on fosters trust and makes it possible for investors to provide support or guidance.

• Deliver on a consistent monthly schedule

Regular updates to investors guarantee that they remain aware and involved in the company's progress.

• Combine qualitative observations with intricate calculations

While metrics present performance in an objective manner, qualitative insights provide the figures with meaning and context.

• Updates should be sent in time for investor meetings 

Providing updates prior to meetings guarantees that the conversations are well-informed and beneficial.

Advantages for Investors Updates

Frequent updates enable the organisation to maintain good connections and keep investors informed and engaged.

The following are some advantages of providing regular investor updates.

• Regular Communication Fosters Trust

Reliable and consistent communication with stakeholders lets investors know how the business is doing. The company's credibility is bolstered by its transparency.

• Updates Tell Investors How to Get Involved

Giving investors strategic insight into how they might work together to support business success is possible by providing the appropriate KPIs. For instance, high-level plans that suggest exceptional applicants or fresh recruits for available positions might be attractive to investors.

• Updates Highlight Possibilities for Additional Funding

Investors are more likely to want to contribute more to the growth and success of the company, whether it be through independent investment or subsequent fundraising rounds, if you can demonstrate to them how their money has been used to achieve goals.

• Investors and the Business Can Exchange Expertise

The combined knowledge of investors is extensive and pertinent to the business in many different domains. Investors can more easily take on the role of mentor and use their experience to benefit the company if there is greater communication between the two parties.

• Updates Make the Company Responsible

Holding company executives accountable for their performance involves sharing KPIs and results reflections. Additionally, it allows investors to question financial hypotheses and offer observations, allowing you to modify plans as necessary.

Writing an Investor Update: A Guide

Making decisions about what to include in your investor update requires careful consideration. To create an update that enlightens, engages, and instil confidence, be thorough yet succinct, emphasising important metrics, milestones, and strategic context.

1. To begin, use a tl;dr

Investors are usually busy with a portfolio of startups that need their attention. Write a few succinct phrases that highlight the most important information from your update; use bullet points if at all possible. Investors can quickly understand the main points of this executive summary, even if they didn't read it because it is "too long."

2. Domains Where Investors Can Provide Assistance

Investors want to see the firm flourish, therefore it's critical to explain to them how they can contribute specifically to that goal. Provide succinct, precise details on how investors can make a contribution.

Perhaps it entails making cordial introductions to applicants for available executive positions. or a meeting with a significant partner at a corporation via which you are introduced. 

3. Provide an update on your financial figures.

Transparency is provided by providing monthly updates with financial data, ensuring investors that their money is being invested prudently. It offers a transparent picture of the startup's state, facilitating defensible debates and wise choices. Presenting these numbers and KPIs on a regular basis establishes credibility by showcasing a founder's dedication to responsibility and determining product-market fit.

4. Outcomes and KPIs

Investors value net dollar retention and MRR/ARR, but use caution when sharing more information. Share only those KPIs with prospective new investors or the general public outside of board meetings. If you feel comfortable sharing the outputs from the worst-case, base-case, and best-case models, you should also think about putting some findings from scenario planning here. 

5. Incorporate client victories

Draw emphasis to any noteworthy new client accounts that were opened within that time. Give specifics on the extent of the extended ties with current clients. Validation from renowned customers shows that your product is making a significant impact in the market.

Explain the strategic importance of securing each significant client victory and estimate the possible financial impact of closed big deals.

6. Departmental Highlights and Objectives

Divide the company up into departments, then report on the projects and advancements made towards each department's objectives. In this case, the CAC ratio and burn rate are important. Insight into performance to plan and a summary of how headcount has changed and will change in each area should be included in your department-level updates.

7. Describe new recruits and team updates

Investors can learn more about your company's internal culture and market positioning by receiving regular updates on new team members and significant hires. Furthermore, emphasising promotions highlights the business's dedication to developing and valuing internal talent and creating a culture of loyalty and progress.

8. Express gratitude to investors who help your startup succeed.

Acknowledging and expressing gratitude to supportive investors in your monthly update accomplishes three goals: it communicates sincere gratitude, encourages additional investment, and fosters a collaborative achievement culture by highlighting the fact that the company's accomplishments are the consequence of teamwork and direction.

9. Alter the format from time to time

To encourage more in-depth participation, think about periodically altering the standard structure of your investor communications. Standard emails or PDFs are broken up by informal small group meetings, interactive video sessions with Q&A, and product demos.

Make sure you include all the important content that investors require, regardless of the method in which it is delivered. Investors pay closer attention to your revisions when you update your strategy.

Templates for Investor Updates

The task of sending your first investor update can seem overwhelming. We think that talking to someone who has been there before is the greatest way to learn. Fortunately, an infinite number of investors and founders have published their templates and best practices for updating investors.

To effectively communicate your progress across KPIs, milestones, obstacles, and discussion topics, as a startup founder, use this editable investor update template.

Update for Monthly Investors - [Month Year]

• Salutations

• Briefly stated

A two to three sentence summary of the main indicators, benchmarks, and background Financial Updates:

Updates on finances:

• Cash balance

• Runway

• Burn rate

• Revenue margin

• Net margin

• Operating metrics

Metrics for Operations:

• Monthly Active Users

• Monthly New Users

• Total Customers

•  Churn Rate

•  CAC

Metrics for Operations:

• Monthly Active Users

• Monthly New Users

• Total Customers

•  Churn Rate

•  CAC

Important Victories This Month:

• New clients:

• Increased clientele:

• Important alliances:

Updates on Product Development:

Metrics for Operations:

• Monthly Active Users

• Monthly New Users

• Total Customers

•  Churn Rate

•  CAC

Introduced new features:

• Priorities for the product roadmap:

• Updates from the team:

Recruits: Major advancements: Principal obstacles:

• First Challenge

•  Second Challenge 

• Third Challenge

Express gratitude to helpful investors:

• Thank you 1

• Thank you 2

• Thank you 3

We thank you for your constant help and advice as we expand the company. If there are any more topics you would like us  to discuss in the upcoming monthly update, please let us know. Thank you for taking the time to assess our development. Kindly get in touch if you have any more inquiries!

Conclusion

In order to make sure you display the appropriate metrics at the right moment, you can also build bespoke dashboards from the ground up. Additionally, you can share the canvas directly with investors so they can always stay updated on the performance of the company thanks to role-based rights.