How to draft an Investor Update
October 19, 2022
As a company grows and raises investor money, the startup environment changes quickly. Investors in the company will be interested in knowing peculiar details about the business growth. They want to know all about the financials so far, the customer base of the company, hiring and retention and every other important update that was essential to help raise funds for growth. This request is what is known as an investor update.
Investor updates are usually documents that help you communicate key business growth information needed to share to the investor at regular intervals to help solidify your business relationship, gain more trust from the investors and also help you attract potential investors in your company. In basic terms, an investor update helps you keep your investors up-to-date with your company's progress so far.
What should be in an investor update?
Depending on the kind of investor, items in an investor update tend to vary. At the beginning of the relationship, investors often specify how they want the information to be presented, the key details they want to see and how it should be shared with them. In general, an investor update should be clear and concise, with accurate information and fewer technicalities for easy understanding. Below are some important aspects of what should be included in an investor update.
Accurate Data (Key Metrics so far)
Allow your investors to paint a picture of your startup growth by providing them with accurate data on the growth from inception to date. This shows that your relationship is hinged on transparency and can also give them a better insight into their next key decisions. Key metrics such as cash flow, profit margins, active & inactive users, churn rate, monthly recurring revenue, and customer acquisition costs are some of the metrics that can help them paint an accurate picture of your organization.
Your numbers might not always be rosy and that is okay. Even the best startups don’t always have it 100% positive at all times. Don’t try to alter the metrics by presenting non-factual numbers. An honest update helps your investors know how better to help you grow.
Wins & Losses
Include the necessary wins that have been spotlighted within the reporting period alongside the losses and stumbling blocks where the case may be. Your wins might include your product updates, launch, media highlights, team & staff updates, customer feedback, and so on. The key point is to share what the experience has been like so far and the key lessons learned, not excluding how you plan to commit to the next phase with the knowledge gained.
Your losses are also important for insight purposes. What you learn from your loss is the insight you need to avoid future mistakes so it's important to include them as well.
Runway
Your runway refers to how much further the current investment will last or how much time that’s left before the company needs to raise money again. By highlighting what has been achieved so far, what’s left to be achieved and when it is being planned to do so. This section is important so they know when next you might be approaching them for funding. In this section, you can also ask for help. Investors might be able to plug you with opportunities beyond the capital, for example, great talent opportunities, getting you in a room with other potential investors or consumer markets that can be explored.
To further guide you, below are some investor update templates that you can review and adopt.