Investor updates are a critical way to maintain transparency, build trust and keep investors informed. In addition to communicating financial progress, key milestones and company performance, investor updates provide an opportunity for entrepreneurs to ask for help/guidance or connection to potential customers or partners. Informed investors are a startup’s best asset and having regular insights into their investment can make them more likely to participate in future funding rounds or refer the company to new potential investors.
The format and style of an investor update can vary significantly from one company to another, but there are three key foundational tenets that drive strong investor updates:
Highlights and Lowlights
Investors want to know how the company is performing on its core metrics. These can be as simple as daily active users or monthly recurring revenue growth, but can also be a clear indication of product-market fit. Sharing lowlights demonstrates that the company is being honest about the challenges it’s facing and doesn’t try to hide behind false positivity.
Strategic Guidance
Consistent communication with your investors enables them to offer the guidance and support that can propel the company forward. Investors can leverage their experience, network and resources to help in the areas that are most important to the startup (e.g. customer relationships, office space or strategic partnerships). The more invested the investor is in a startup, the more likely they are to provide insight and support. Informed investors can offer a wealth of advice and solutions for startups through their regular insight into the business.
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