Writing Investor Updates - FAQ

At Quandl (the startup I co-founded), we did not send out regular investor updates until after our Series A. This was a missed opportunity for us; I advise you not to make the same mistake.


1. Why should I write investor updates?

The main reason to write investor updates is so that your investors can help you.

Investor help usually comes in three forms: follow-on investment; introductions; and advice. Different investors have differing abilities to provide you with this kind of help.

If your cap table is mostly friends and family, or angels without startup or tech experience, then – candidly – they are unlikely to be able to help you much. In this case, I would not spend time writing detailed regular updates for them. A status email once a year is all you need.

If your cap table includes institutional investors, experienced angels, well-connected operators etc, then they may be able to help you in the ways I describe above. But note that helping you has a cost: dollars, reputational capital, and time, respectively.

Writing regular, informative investor updates makes it substantially more likely that your investors will be willing to pay that cost when you ask. It also makes their help more effective and relevant.


2. Are there any other benefits to writing investor updates?

I found that writing regular and timely investor updates required me to be on top of the business, both qualitatively and quantitatively: finances, key metrics, progress, challenges, team, market, everything. Plus it helped me zoom out and focus on the right tasks (it’s easy to get lost in the weeds).

Of course, you may also be able to achieve these outcomes without writing regular updates, but it helps to have a forcing functiom. Also note that the value of this secondary reason is way lower than the primary reason (of incenting your investors to help).


3. What should I include in a monthly investor update?

Keep it short and sweet. You don’t want to write 2000 words each month, it takes too much time, and it risks investors tuning out. I recommend three sections: key metrics, business update, investor asks.

Key metrics give a snapshot of your business health:

For each number, include your current month’s value as well as the month-over-month % change. Linear runway is if you assume both revenue and burn remain constant; so it’s just your cash divided by your net burn. Forecast runway is based on your best estimate of actual future revenue growth and future burn, ie it includes some forward-looking assumptions on both sides of the ledger.

Business update is just 2-4 bullet points highlighting the most important developments in the business last month. These could be big wins, or setbacks; challenges and opportunities; new hires; learnings; strategic decisions, whatever you think is relevant. Avoid the temptation to write too much here.

Investor asks is what it sounds like – what you need from investors. Again, be thoughtful and selective what you ask for – don’t waste your bullets on trivial requests.


4. How often should I send out investor updates?

For investors who can help: once a month, within the first week of the month. This is for seed stage; once you get to Series A, you will probably have a board that meets quarterly, and so your investor updates should be synchronized to your board calendar.

For passive investors (friends and family et al): once a year.


5. When should I send out investor updates?

It’s really important that you send the monthly update within the first week of the month. You lose almost all the benefits (credibility, forcing function, investor help) if you’re tardy.

The key is to not take too much time writing your updates. A 3000-word email that arrives on the 20th of the month is not as useful (for either investors or founders) as a brief summary that arrives on the 1st or 5th. In steady state you should be able to produce and send this email in less than 1 hour of your time. The ROI of that 1 hour is very high.


6. How candid should I be in my investor updates?

A common mistake is for founders to treat their investor updates as a continuation of their investor pitch. They highlight only the good stuff, share vanity metrics, or become intentionally uninformative or obscure.

I get it; some amount of pitching is natural and maybe even necessary. Even with investors, you still want to put your best foot forward. But if your updates are full of irrelevancies while avoiding actual issues, your investors will recognize it, and, more likely than not, think that you’re in denial.

The other reason to be candid is simply this: investors want to help – and they can’t help if they’re not informed. If you have to brief them from scratch every time you ask for something, it’s ineffecient and leads to low-quality input. It also precludes “serendipitous” help – eg. an investor reads your update, and although there’s no explicit ask, they reach out because something in there sparks some thoughts that might be relevant.


7. What if there’s no news or bad news?

If there’s no news, simply say so.

If the news is bad, it’s best to share it relatively early: that way, you signal that you’re aware of the problem, and are actively working to solve it. This builds more credibility than blindsiding your investors with crises that seem to appear out of nowhere. (Note that this is not an invitation to share all your little problems – all startups have challenges, and you want to convey that you’re on top of most of them. We’re talking about biggies here.)

The absolute worst option is radio silence. Radio silence is a very strong leading indicator of startup failure; there’s no quicker way to have your investors write you off. Trust me, as an investor, I’d much rather learn about your challenges and problems and bad news early, so that I can try to help you fix them, rather than stay ignorant until it’s too late.


8. What should I NOT include in an investor update?

I sometimes see founders send “marketing updates” – aimed at their customers – to their investors. Don’t make this mistake; these are two completely different things. Same goes for drip campaigns and nurture.

Some founders are hesitant to include revenue and other KPIs in their updates. Personally, I find that an update without revenue, growth, burn and cash rates is of limited utility – it doesn’t help me understand the health of the business, and without that understanding, it’s hard to offer good, calibrated advice. So I do advise including them. But if it makes you feel better, put a disclaimer saying “confidential, please do not share”.

(Ultimately, it comes down to how much you trust your investors.)

I wouldn’t include any valuation numbers or fund-raising target numbers in an investor update – remember, your future investors may (and often do) ask for all your letters as part of their diligence, so be thoughtful about that. Also, don’t include anything that is truly secret sauce. In any case, most investors won’t understand or care about the technical details.


9. I’ve never sent updates in the past, and feel awkward about starting now. What should I do?

Don’t overthink it. Just add a line at the beginning saying: “Although we haven’t done so in the past, we’ll be sending regular monthly updates from now on. Here’s the first one.” And don’t feel obliged to constantly fill in your investors on the last 6 or 12 or 18 months of progress. Monthly updates should reflect monthly events. (Maybe in the very first update, you can have a section called “highlights of the last year”, but that’s about it.)


10. Should I include potential future investors in our investor updates?

(For example, we’ve been introduced to a few A firms, or Seed & A firms, who have not invested in this round but want to stay updated. Do you think we should add them to investor updates or keep it more personal and just check in every once in a while?)

I would not add them to the standard monthly investor update, but instead send a more personalized update once every 3-6 months or so, to a selected subset of investors who you really like and who you think would be strong candidates for your next round.


11. How will things change after my Series A?

These guidelines are for pre-seed and seed stage companies. Once you’ve raised a Series A and have a formal board, all of this becomes obsolete and will be replaced by whatever communication cadence you agree upon with your new investors. (But many of the habits you develop via these updates will serve you well at that time).

The most common pattern, post Series A, is for a quarterly board meeting, with a detailed board pack (deck or memo) that is shared a week in advance. The board pack is essentially an expanded version of the concise monthly updates that you used to send during seed stage, with a lot more detail about the business, challenges, opportunities, areas for board discussion etc.


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