Investor Updates, an Entrepreneur’s guide

At Blue Box, I absolutely failed at providing our investors timely and regular updates. So when Ben Kepes tweeted this last night, I felt a pang of guilt:

I’m now invested in 19 companies, and of that group, I get regular updates from ~4, so I absolutely understand what Ben’s complaint is (A huge shout out here goes to Avni Patel Thompson from Poppy who sets the bar for what these updates should look like). It’s frustrating to write a check and then hear absolutely nothing.

Through the conversation with Ben, I realized I never had much coaching on how I should frame these updates and what should be in them. So I wanted to share a few more thoughts on the topic…

Investor Updates… Why is this so hard?

For most entrepreneurs, investor updates can be considered important but not urgent work. As an entrepreneur, you’re constantly at capacity and the natural reaction is to tackle urgent work first. Often, there’s never an end to that urgent work so without prioritizing that important work, its constantly stepped over.

This gets further compounded when things aren’t going well with your company. It can feel wildly overwhelming to tell investors who trusted you with their funds that all the hopes and dreams you sold them aren’t materializing in the way that you thought they would. So you wait and procrastinate. The longer the duration between updates, the more you have to explain and the more overwhelming it can become. And so you procrastinate further and no update is ever sent.

It’s a wicked cycle and one you must consciously break.

Why is this important?

Your investors can be your greatest allies and advocates. They can only be helpful if they know what’s going on. Angel and Seed investors pride themselves on providing value to their fledgling companies, but it’s impossible to provide value if you’re kept in the dark.

Further, your circle of investors will certainly be first on your list when you’re ready to raise your next round. If they’re excited about what you’re working on and actively see your progress, it’s a much easier conversation than if you’re forced to start from scratch and bring them up to speed on everything that’s happened since you took their money. Ultimately, the best investor relationships are ones that are built on a long founded and deep seated place of trust vs. an obligation of a one time transaction.

Lastly, it’s just polite. You took someone else’s money to build your dream. The least you can do is keep them updated on how it’s going.

Unfortunately, withholding information due to fear is more damaging than not. Every investor knows there will be challenges and obstacles as your business grows. They likely made their investment because they had a belief that you as the founder had the ability to overcome those obstacles. But as those obstacles occur, they want to know about them. The more you demonstrate your ability to overcome challenges, the more trust you build and the more support you’ll likely obtain.

What should be in your investor updates?

Here’s the best part about all of this… Investor updates should be incredibly simple to compile.

Investors aren’t expecting an encyclopedia’s worth of content — they’re likely just as busy as you are — but they do want to know about the health of the business, where it’s headed, and what (if anything) they can do to help.

Your update should include:

1. Key metrics you’re using to actively manage your business. This likely includes revenue growth, DAUs, customer counts, etc…
2. A financial summary. This can be as simple as your cash balance, burn and runway measured in months.
3. A 4–5 sentence narrative about the state of the union. What’s been working since the last update and where you’ve been struggling.
4. An ask of your investors. What can they do to help? Are you looking for specific introductions to customers? Are you trying to hire a certain role? The more specific you can be here, the more likely you’ll be to receive a response.

That’s it!

When and how should you send them?

There’s no right answer here as each business will experience its own unique rate of change. That said, you should send your updates no less than quarterly.

The companies I’ve seen be the most successful with this progress have built the production of these updates into their monthly operating cadence. As you close your books and do your own internal reporting, you’ve already got all the KPIs and Financial information you need to produce the document.

Email’s a fine medium and I suggest creating an email group with your investors pre-subscribed. CCing all your investors can create frustrating Reply-All dynamics, so my recommendation is to avoid that headache.

As an aside, a friend has been using a service called Visible for his companies updates and has been thrilled. If I were starting from scratch today, I’d start there.

Update: Here’s an idea suggested by the same friend that uses Visible: Video updates. If you feel like spending the time to write an update takes too long, record a 1–3 minute video with the same information and send that on. It gets the message across, is personable and can dramatically reduce the amount of time it takes to produce these.

Simpler than it seems!

This shouldn’t be a painful process and the benefits should greatly outweigh the cost from a time perspective.

The first one is the hardest, so if you haven’t sent an update in a while, now’s the time to do it!

— Jesse

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