When you raise capital from investors, you bring on a new group of supporters who want to see you and your business succeed.
As a founder, it’s your responsibility to keep those investors informed and updated about what’s going on with the business they’ve put their money behind — sharing the big news, wins and losses, and future plans that could shape the company’s trajectory.
Take it from Mathilde Collin, Founder and Executive Chair at Front, who famously championed “focused and consistent updates.” (Collin practices what she preaches — check out this investor update from Front’s early days.)
Writing good investor updates can help you deepen transparency and trust, both critical to maintaining the health of long-term investor relationships.
Understanding investor updates
An investor update is a regular communication that provides your investors with updates on your company.
Startup founders typically email these updates out monthly or quarterly to their list, and may also send them to other close supporters — like friends, family, and advisors.
As Brian Nichols, founder of Angel Squad underscores, “[These updates are] a two-way street.” You keep investors informed and engaged, and in turn, give them opportunities to help you, too. It’s generally in an investor’s best interest to see their investments succeed, and having consistent insight into your business better positions them to use the experience, network, and resources at their disposal to support you as you build.
Plus, as Nichols adds, “They want information about how their investment is doing.”
Preparing to write an investor update
Your update will need to cover a bit of ground — like financial metrics, challenges you’re experiencing, plans for the following month (or quarter), and specific investor requests.
While we’ll talk through structure more specifically in the next section, get ready to do a little hunting and gathering the first time you write an update. Once you have a process down for collecting the necessary information, and you know exactly what’s most beneficial to include, you can spin up a quick checklist or template, and put some steps in place that make prep easier to complete in the future.
Most of the key performance indicators (KPIs) that you’ll share can be found within your company’s databases and sources of truth. You might also gather marketing or growth metrics from your customer relationship management (CRM) software, or project management data from a database management system. Understanding which KPIs are found in which databases, and/or who the right people are to report on them, is the first step in gathering the right information for your update.
As your company grows, you may need to do less digging yourself — you can ask your executives to report on new developments within their functions, like product shipments, new processes, accomplishments, and learnings.
You’ll also want to collect highlights to share. Keeping a running list of key events, milestones, or other topics you want to cover can help you have something holistic to work from.
Lastly, pick a schedule for sending updates and stick to it. It’s common to send out investor updates at the end of the month, or the very beginning of the following month. Show your commitment and attention to detail by getting it done like clockwork.
Structuring a good investor update
Investor updates are usually intended to be concise and to the point. They should also be navigable — aim to make them easy to skim by using bullet points, short sentences, and clear section headers.
Let’s talk through some tips for each section of your update.
Introduction
The introduction to an investor update should generally be brief, and it should reflect an understanding of what your particular investors feel it’s important to know. Usually, you’ll include key takeaways from the month (or whatever period you’ve opted for — we'll stick with month here) and tell your investors whether the month was good, bad, or in between. Make note of anything particularly interesting, whether that be a record growth rate, new hires, a big event, a product shipment you delivered, or a pivot in strategy. Keep the introduction to about 2–3 sentences.
Business and financial performance
This is where you list your KPIs and how they’re trending— for example, monthly recurring revenue (MRR) or annual recurring revenue (ARR), number of customers, growth rate, net retention revenue (NRR), churn rate, and increase/decrease in customer acquisition costs. You don’t need to list every metric your company tracks — just share the ones that are most critical to the business and most important to the investors. Some investors want to see just a couple, others are interested in many more, but as a general guideline, 3–5 metrics are reasonable in many cases.
In addition to KPIs, you may want to note basic financial information like monthly expenses, burn rate, and cash runway.
Whatever you include, unless your investors don’t find it helpful, plan to keep including it every time — this helps provide a consistent and predictable picture over time.
A bulleted list or table often works well to keep this section neat and easy to skim.
Highlights
Highlights should include things that went right in the previous month — from a big new customer onboarded or partnership formed to new hires, product updates, and what you spent time focusing on improving.
If your highlights are numerous, you can break them up by team or function — e.g., product, customer support, design, sales, etc. — or these can all be listed under one section. Use bullet points for brevity.
Lowlights
Where are you facing headwinds? Did you miss your target growth rate this month? Did you lose a big customer? Were your customer acquisition costs higher than expected?
Providing (honest) visibility can feel scary, but whatever you’re going through, experienced investors have probably seen it before. They certainly know that building a startup is hard, and the more transparency you practice the more trust you’ll earn. By sharing a difficulty, you can learn how your investors may have dealt with the same challenges before, as they can offer hindsight to save you precious time.
Next month
This section is for setting expectations for the upcoming month, explaining what matters to you most right now, and sharing which initiatives are in progress. Here, you can explain which parts of the business you’ll be prioritizing in the near term — for example, you might note if there are product updates that will be implemented, marketing campaigns that will go live, or announcements to expect.
Of note, this section isn’t typically for forecasting metrics you’re expecting to hit — this is about what’s happening.
Asks
Your investors are here to support you — and they’re invested (literally) in your company’s success. One of the most valuable aspects of choosing which investors to have on your cap table is gaining access to their private networks that can help solve your unique challenges.
You might want to mention new positions the company is looking to fill, recent announcements they could help amplify across social media, introductions that might be helpful for growth or customer acquisition, or that you’re looking for beta testers for a new product, etc.
Chad Fox, General Partner at Fox Ventures and advisor at F Partners also notes that most founders ask for, “introductions to industry peers, other investors, and customers.” And, he says, those are also “generally where investors can be the most useful.”
Tips for writing an effective investor update
Being clear and concise is foundational to writing an effective investor update. If a visual aid can explain something more readily than writing it out, then don't hesitate to use charts, graphs, or other tools to improve your updates. (Investors, like yourself, are busy — help them scan your email by making it easy to digest.)
Founders should use this opportunity to be transparent with their investors. Although it can be tempting to hide the full truth — particularly if the company is going through tough times — writing to your investors should lean towards honesty first and foremost.
It’s a thought exercise that benefits founders as well.
Fox says, ”[Writing investor updates] causes founders to reflect on their current state of affairs. What is working and what isn’t? The best founders use this reflection period to better improve their business.“
Lastly, stick with a consistent sending schedule. It could be the last Friday of the month or the first of the following month — whichever day you choose, a consistent timeframe shows investors that you take these updates seriously.
Common investor update mistakes to avoid
One of the biggest missteps founders make when writing investor updates is to simply stop sending them.
When investors stop receiving updates, it can be a warning signal that things aren’t going well. Founders may feel embarrassed by their challenges, or concerned that their investors will get mad at them if they deliver negative news. But professional investors know the struggles of building a company and the statistical likelihood that any individual company will be a success is low.
Instead of ignoring your investors when you fall on hard times, continuing the line of communication could result in a better outcome and support for you and your business so you don’t deal with the challenges on your own.
Fox has experienced this firsthand as an investor. He notes, “Investors cannot help if they don’t know what’s going on.” When it comes to supporting founders, “Sometimes investors will see something in an update and reach out proactively. Other times founders can ask for help and having several updates worth of context on the business allows investors to provide better support.”
Another common mistake to avoid is covering only the highlights and bypassing the lowlights.
If an investor receives an update with only highlights and no lowlights, they might wonder what's actually going on behind the curtain — or if you’re hiding something. In startups, it’s rarely the case that a month goes by with nothing to worry about.
Your lowlights certainly don’t have to be the end of the world, or the end for your company. They could even be a result of growing too fast, like a product bug or feature breaking. But all startups have challenges and investors want to know what these are.
In sum...
Writing an investor update is an important way to stay connected with your supporters and strengthen relationships with people who want to see you succeed.
Making sure it has the right components will help you stay accountable, celebrate the big moments, and weather the rough patches as you grow your business.
Looking for more insights to help you build your company? Explore Mercury Raise, our platform offering free expert mentorship, fundraising support, and resources for founders.
Tucker McKay