For the past few months, closing your deal with investors was your end point. At times, it looked like a big, locked door, and at others, it was a light at the end of a tunnel.
But now, you’re there. And you’re not alone. Your new investors are here too. Dusting down their jackets. They’re excited — in fact, they’re beaming at you, waiting for you to make the next move.
You’ve built a budding relationship with these people. There’s no limit to where it could go — they could become the best mentors you ever had, could commit to further funding that boosts your startup to a national scale. So help this new relationship reach its full, unpredictable potential by nurturing it. Send exciting, informative messages that bring investors into your fold and give them the opportunity to enrich your company with their insights.
Here’s your guide to how to schedule, style and structure regular written updates to investors, in a way that brings them right into your team.
Choose your schedule and stick to it (mostly)
Consistent updates shows your calculated, giving investors confidence in your ability to organize and communicate, while fueling their interest in your products and team with new tidbits of info. For most startups, it’ll make sense to settle on a monthly update.
- Weekly is too often. Some events occur on a weekly basis, but sticking to such a frequent update won’t give you the chance to put these events in context with other changes.
- Investors may have questions to ask or ways they can help you, and waiting much longer than a month before updating means you run the risk of missing their timely insight.
- Events, metrics, achievements, asks — all are pretty crucial development. Don’t let them go off the boil and lose the sense of urgency in your relationships with investors.
Once you’ve developed a monthly rhythm, you can be more spontaneous. Send a candid video from your team or an unexpected piece of press. As Austin Allan, founder of Tio Gazpacho, says: “If someone doesn’t want to hear from you, they’re going to say they don’t want to hear from you.” Go into your new relationship assuming the best — respect your investor’s time but treat them as someone who wants to be in the loop.
Get your timing down and then you can start tackling your tone.
How should your updates actually sound?
“Write like you talk”
In his essay “Write Like You Talk,” Paul Graham says “Informal language is the athletic clothing of ideas.” He means that by speaking in your normal voice and using the vocabulary and rhythm that comes naturally to you, you put yourself in a better state of readiness to react to challenges and seize opportunities.
But while you want to write as you talk, you also want to emphasize certain qualities. Here’s how you can elevate your “athletic clothing” to impress your message onto investors’ minds.
- Be concise. Never ever say something in 10 words you could say in 5.
- Be authoritative. Even if the update is asking for help, you’re still the captain of this ship. The onus is on you to know what your KPIs are showing, admit mistakes and proactively talk about needs you have.
- Be open. As Mike Del Ponte, founder and CEO of Soma says: “The most important aspect of an investor update is honesty, which means sharing both the good and the bad. This gives investors the information they need to help.” Honestly about what’s challenging builds your credibility about everything else.
Once you’ve laid out the expectations for when you’ll send updates and you’ve developed your unique tone, you can focus on content.
Here are the four basic sections every update should include:
- A summary to set the scene.
- Cash flow and most important KPIs so that your financial and performance health is clear.
- Product updates in context showing how you’re evolving based on what you’ve learned from your audience.
- Team talk to immerse the investor in your kickass culture.
We’ll dig into each section and give you some ideas for what to include that you can adapt to your unique company.
Set the scene with a summary
Just like any piece of writing, it’s tough to launch into the hear tof the message without setting the scene a bit first. A summary should be the first paragraph of your update.
You can use it in several ways:
- Simply to lay out what you’ll discuss in the letter, like a table of contents.
- To pick out a moment that happened with your team this month that sums up the themes of the update.
- If you have a major question or ask this month, to lead with that up-front. It’ll give investors the chance to get thinking about how they can help and view the rest of your update in that light.
Remember, investors may be getting updates from many companies in a single month. Set the stage to help them hone in.
Be bold with cash flow and KPIs up front
“This one is the most important one in my opinion,” says Charles Hudson, Venture Partner at SoftTech VC, “and should always be an above-the-fold item in the summary. Giving investors a sense for how the company has performed in the past 90 days helps smooth out monthly variations and gives investors a sense for how burn is trending.”
- Cash flow. Cash flow is a barometer for your business’ health. Provide figures for net revenue, cost of goods sold, and your ending cash for the month.
- KPIs. Try digging in to one KPI in particular. Monthly customers, shelf velocity, MRR, reviews and referrals — whatever you’re trying to grow this month — show your recent month-over-month growth and explain why this is a win (or a challenge) for your team. You can even make it visual. Use a tool (like Baremetrics or Chart Mogul) to present your data in an easily digestible form.
- Needs and asks. Right up front, alert investors if you’re low on cash or you anticipate the need for further fundraising soon. This furthers the honesty you’re practicing in your update tone.
Once you’ve talked about your cash status and KPIs in previous updates, investors will be able to judge their ROI in context with previous months.
Connect learnings and strategies to product updates
Investors want to see that you’re not just building your product from the initial plans, but that you’re evolving it over time to match what’s going on in the market. Product/market fit is not static. Show you’re flexible with your brand identity and product offering, so you can thrive with evolution, rather than get left behind.
- Take learnings. Show that you’ve been taking in information this month. What are the main insights that have come from customer feedback or competitive analysis?
- Adapt strategies. Learning is great, but the important thing is to connect each learning with a strategy. What are you going to change or try because of what you’ve just learned?
- Contextualize product updates. Expose your evolving roadmap. Show investors how learnings and strategy generation have led to product decisions.
This all shows you’re thinking ahead. Investors don’t want to see a press release when a product has already been rolled out to the public. They want to see your roadmap and be able to help you as you evolve iterations of your product.
Immerse investors in your team culture
When it comes to discussing your team dynamics, morale and organizational structure, let your team speak for you. Verbatim information like testimonials and videos will allow investors to get a real sense for how your team works, rather than getting everything filtered through you as the leader. Investors don’t just commit to products when they make a deal, they commit to teams, so make it personal.
Here are some ideas for what to include in your team section:
- Give snippets of what members of your team are working on. For example: “Sally and the marketing team are experimenting with paid acquisition — they’re running A/B tests on our Facebook ads and targeting them to segments of our customers,” or “This month, our co-founders have been focusing on hiring a VP of sales.”
- If you’ve updated your hiring criteria, explain briefly what you’re now looking for.
- If you’re hiring for particular roles, send investors your ad copy. They may be able to recommend someone for the position.
Surround investors in the atmosphere of your team so that each time they open an email from you they feel a renewed sense of commitment.
Use investor updates to mobilize for next month
Writing a monthly round-up shouldn’t be a chore. If it is, you’re doing it wrong. Use this writing time to see how your business is doing. Take a good look at your team, notice how morale has changed from last month. Focus in on your key performance indicators to celebrate progress and evolve strategies as needed. You could even find that your monthly letter to investors becomes a monthly pep talk to yourself.