The Smarter Startup

The Importance of Investor Updates

Startups that provide regular investor updates are 3x more likely to receive follow-on funding. Here are some tips to help your startup.

Many founders don’t understand the importance of regular updates and communication with their investors. Once they secure their funding, the focus moves to their business – which makes sense. However, it is critical founders communicate regularly with their early investors. Neglecting to do regular and consistent investor updates may cost you in your next fundraising round.

Startups that provide regular investor updates are 3x more likely to receive follow-on funding.
Source: Visible Data Set & Investor Survey

60% of investors don’t hear from their portfolio companies quarterly
Source: Hustle Fund

I recommend that founders follow a consistent cadence with their investor updates. Put it on your company calendar and make sure your team executes an investor update regularly.

Stage Frequency of Investor Updates

  • Formation: Weekly
  • Pre-Seed to Series A: Monthly
  • Series B+: Weekly, Monthly, or Quarterly, depending on your investors 

Investor Update Email Format

Email is a good way to send your investors an update. It keeps it simple and doesn’t require investors to click on links or go somewhere else to read it. A simple format for your email that works well:

  • Highlights
  • Lowlights
  • Asks (more details below)
  • Thanks (more details below)
  • Customer Story – Include a customer success story if you have one
  • KPIs (recommended list below)

Although it is tempting, don’t skip an update if your metrics are low or you have encountered roadblocks. It is critical to keep investors informed in good times and difficult times. If you are upfront about your struggles, you will likely receive help or suggestions from your investors.  Plus, investors are more likely to invest in companies when they have a deeper attachment, trust, and understanding of what got them to where they are today – even through the difficulties.

“If you don’t write regular updates, your investors won’t want to help you. It’s hard to help a company and put your own social capital on the line with your network when you have no idea what is happening in your own portfolio company.”
Source: Elizabeth Yin

What KPIs Do You Include in an Investor Update?

Your Fractional CFO is the logical point person to coordinate investor and potential investor updates with the founder’s input. I suggest including the following metrics:

  • Cash on Hand
  • Cash Burn
  • Runway
  • Revenue
  • Headcount
  • North Star KPI

North Star KPI is a metric that a company uses as a focus for its growth. This number best reflects the value your company brings to your customers. In addition, the North Star Metric gives direction to your company’s long-term growth versus short-term growth. It is critical to find this metric and share it with investors, and it may change over time. Your fractional CFO can help with your North Star KPI.

You can also use an Investor Update Platform like Visible, which makes the whole process simple yet impactful.

Also, in Your Investor Update:

  • Thanks – Give thanks to any investors who have helped with something (an introduction, advice, etc.) in the update.
  • Asks – Including an ask is appropriate but be specific – This is too vague: “We would love intros to VPs of Engineering.” Instead: “We would love intros to VPs of Engineering of SaaS companies with over 1,000 employees in North America.”

We also recommend these resources about investor updates to our clients: