What Investors Expect: Investor Updates
During your key early days with institutional investors, the best way to keep them engaged in your company is with monthly investor updates. Maintaining consistent updates is crucial for a strong relationship with your investors, and the good ones expect it. By treating them as though they are partners in the business rather than just capital contributors, you build trust as well as set expectations that makes them active participants in your company. This will allow you to utilize their network and resources and solicit advice when the business requires it. Investors will expect these monthly updates in the form of an email where you will outline the most important changes in your business during the previous month and your actionable items for the month to come. Consistency in messaging, presentation, and timing is key, and there are several items that investors expect in these emails:
The Email Itself:
- Optimized for Mobile: Just as you need to ensure that mobile visitors to your site have a positive experience, it’s fair to assume that your investors will be reading your update on the run. As Manu Kumar of K9 Ventures reminds us, “the squeaky wheel needs the most grease” when it comes to portfolio companies. Make it as easy as possible for your VCs.
What should be included in your monthly investor updates:
- Topline Performance: How are the core business metrics in your business going? Are there any challenges you’ve been able to make headway on? What have you learned about the business and its drivers as you grow? This last one is key, as the best entrepreneurs quickly act and react to changing business dynamics.
- Updated Forecast and Variance to Prior Forecast: Make sure your investors are aware of how you performed compared to expectations how any variances affect your forward looking business forecast. Not updating your forecast monthly? Making spending decisions, such as hiring new roles, becomes a blind exercise that puts the business at risk. If you don’t have enough time to do it, get help.
- Operational Updates: Any new hires or fires? Key software updates? Keep your investors updated on important day to day changes.
- Market trends: Make sure you keep your investors updated on current market data and trends, one easy way to do this is by maintaining your operating model.
- Inbound M&A or VC Interest: Inbound interest can be both a positive (exit!!!) and negative (time suck if unsuccessful), and because deals need to move fast to avoid going stale, you may not have time to wait until your quarterly board meeting to get input.
- Challenges: What difficulties are you currently facing? Are you struggling with HR, Sales, or Development? What are your biggest pain points, and what have you been doing to address them?
- Ask for Help: How can your investors help with your challenges? Not only do they want you to succeed, but they want you to let them know where they can be of assistance. If you can make specific requests they will be happy to do you favors.