Why and how to update investors
How well and consistently you update investors is one of the best predictors of your success. We update ours every month.
If you take on any outside capital, you’ll want to send consistent updates to your investors. Need convincing? Here are a couple of obvious benefits.
Staying top-of-mind
By updating investors regularly, you stay top-of-mind. And you want to stay top-of-mind with as many investors as possible. When one inevitably ends up on a call with a potential employee, prospect, or future investor, you want them to remember you.
Getting help when you need it
You can’t build a startup on your own. You need help. You’ve chosen investors for a reason, often because of their previous experiences, skillsets, or networks. The more you keep them informed on what’s happening in your journey—what’s going well and what’s not—the more they’ll be able to help proactively and reactively.
You’re going to have asks of your investors. Help recruiting. Help selling. Help on strategy. Help in any way. And what’s the best way to get anything from someone? To give in return.
Giving investors your latest thinking on where you’re at is the best way to get something in return. Said another way, you’re in a much better position to ask for an intro to that next great lead when you’ve been sending them a regular update on how their investment is performing.
Still not convinced? Here are a few not-so-obvious benefits.
Really know your shit
Sending regular updates is a forcing function to clarify your understanding of the market and your company. Writing is a clarifying process. Having to write a summary of where you’re at means you have to sit down and really think about it.
Give investors a reason to (re)invest
Investor updates are also a critical track record for future financings. Prospective investors LOVE to see how your thinking about the business has evolved and how your delivery compares to what you originally promised. Since so few founders send updates regularly, it’s an easy way to stand out.
When we raised our Series A from a16z (here’s the deck we used), they asked us to forward them every investor update we’d sent up to that point. Thankfully, we’d been thoughtful about what we’d sent and done it without fail. Now, more than three years in, we still send an investor update every month.
What does a good investor update look like? I don’t have a huge sample set since I’m not an investor, but here’s the anatomy of ours and how it’s evolved as we’ve grown.
Start simple
Our initial updates before launching Equals were simple. There were no metrics to share, so instead, we’d lead with “where we need your help” and then remind investors what we’ve set out to do. We'd then talk about the three most important things about our business at the time:
Our team
Our product
The content we were producing
Layer in key metrics
Once we’d launched, we started including key metrics, but our updates still aimed to cover the fundamentals of our business:
How the business was performing
Key updates on our team
What product we were shipping
How we were bringing the product to market
Where we needed help
If you're unsure how to communicate your metrics effectively, here’s our take on the do's and don'ts of data visualization.
Pare back as you grow
Now that we’re further along, we just share key metrics and commentary. We don’t often include requests for help (unless they’re broad, like an ask to support a launch) as they’re sent to too large a group. Instead, we send specific requests to relevant investors directly.
We occasionally send more thorough updates for big moments. For example, when we (in)famously tried free, we sent a much longer contextual update to investors.
Despite their evolution, the overall spirit of our updates remains to keep investors aligned and excited about what we’re working on and where we’re going.
Whether we have a good or bad month, Ben and I still update our investors every month.
I encourage you to do so, too.
P.S. Investors care about your ARR, which can be a real PITA to report on. If you need help getting your ARR reporting into shape, we can help, just like we did for Descript.
