Investor Updates: What you should do
Startups are in continuous movement and over time develop relationships with investors and potential investors for subsequent rounds. It is therefore important that they establish a communication channel where they can periodically share information about the business and future.
The easiest way to do this is through a virtual newsletter that contains in a concise but complete way the most relevant information of each period. This newsletter is similar to your investor presentation, in addition to relevant information it is important that it has a structure and form that is attractive and easy to read. After analyzing multiple market newsletters, the main elements to consider are the following:
- TL;DR: This section describes the main milestones of the company and its objective is to convey to the investor in a clear and concise way the status of the organization. The recommendation is to use between 3 to 5 short sentences in order to attract the investor’s attention or to give him/her the most important information in case he/she cannot read the whole content of the email.
- Founder’s note: Market commentary sensitizing investors to the competitive dynamics. It is important to convey industry knowledge and confidence about the business model being developed.
- Key Metrics: The purpose of this section is to describe the specific performance of the startup and compare it against investors’ expectations. It can be divided into these four categories:
Geography: Present the main KPI’s according to the company’s geographic presence.
Growth: Shows the trend of business development by putting the traction of users and assets of the company.
Financial: Include the most relevant financial figures, such as sales, margins, cash flow, etc.
Operations: Present metrics of the company’s operational efficiency.
KPI’s (Main Location, Growth, Financial, Operations)
Some recommendations to make this section more attractive are to use graphs, traffic lights showing the progress of the KPI’s, percentage changes of the figures with respect to the previous month, analysis of projected results versus current results as well as cohort and retention analysis.
- Product: Collects the most relevant information regarding product status, development progress and future requirements.
- Business Development: Captures the commercial progress of the business development and outlines the strategy to follow to continue with the traction and scaling of the business.
- Team: Shows the outlook for key hiring and talent needs at the business and board level.
- Lowlights / Challenges: Issues and opportunity areas of the startup that it seeks to prioritize to continue its growth.
- Highlights / Achievements: Space designed to celebrate the achievements of the team up to that moment.
- Next period objectives: Share with investors the main short-term objectives. For example, projections including expansion plans, product development, hiring and business development.
- Financial position and funding: Present the progress on capital raising and state the cash position, monthly burn, and runway the company has.
- Help wanted / Asks: Probably one of the most relevant sections where the company requests support from investors (indicating its relevance — high, medium, or low priority) with the following elements:
Introductions with investors to facilitate future capital raising.
Talent (people or recruiters) — at company level and board level
Business development
Others: Review presentations, write reviews, give product feedback
- Press releases / Events attended: Space dedicated to show the company’s participation in the ecosystem through media releases or participation in events.
- Acknowledgements / Recognition: Section to thank the contributions of investors or strategic partners of the company to achieve its goals.
- Team Space: Place to celebrate the team through photos or messages.
- Invitation to interact more: In this space you can include a link to engage in more direct communication with the founders of the startup, either to schedule a call or join a community in channels such as Slack or Telegram.
- Social Networks / Points of Contact: It is always important to include the social networks where investors can follow you and contact information for any pending issues.
General recommendations:
- Remember that you can adapt your newsletter for current startup investors and potential investors.
- Frequency: Define when you are going to send the newsletter to investors and really commit to send it in a timely manner.
- Open the door to receive comments on the newsletter in each edition you send.
- If the newsletter is intended for current investors you can attach in the email the updated financial model with the startup results for their review.
- Personalize your newsletter and give it an image that conveys the values and culture of your company.
The investor update is a fundamental part of your investor relations toolkit, dedicate time to it and make the most of it.
Hector Shibata. Director of Investments & Portfolio at ACV a global Corporate Venture Capital (CVC) fund and Adjunct Professor for Entrepreneurial Finance.
Gonzalo Soriano. VC Investor at ACV.
ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.
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