Investor Updates: Why? How? When?
What you’ll get from this post:
- 1. Why you should update your investors
- 2. A template for great updates
- 3. Example updates from fast-growth companies like Sweatcoin and ScreenCloud
“We connect entrepreneurs and angel investors.”
“We connect entrepreneurs and angel investors.”
That’s our tagline at Angel Investment Network. We’ve been doing it for 14 years so it makes sense! We help make the initial connection that results in feedback, meetings and often investment. Startups get the funding they require. Investors get access to great and diverse deal flow.
But as a result of this, most of our advice and guidance focuses on the early part of the fundraising journey: how to meet investors, how to value your idea, how to find great deal flow, how to invest etc…
This is useful (we hope!). But only as far as it goes. There’s a danger this gives the impression that the relationship between entrepreneur and investor only needs to be fostered at the very start.
This is not true, of course.
Why?
Investor = Evangelist
Any investor in your company can be an evangelist. And an important one. The best investors are not those who sit silently hoping their portfolio grows. They are the people who bring to bear all their resources to help their companies grow. But there is no guarantee they will always do this just because they invested.
It’s down to you to keep them engaged. Your updates will give them the inclination and the material to shout about you to their network.
Investor = Wise
Sure, you wanted investors for their cash. But if that was all you wanted from them, it was short-sighted. It’s a truism about angel investors that they bring more to the table than money. A good angel will have a wealth of experience in business and hopefully your sector.
But they are busy people with active interests all over the place. You’ll only get their attention if you engage them enough to deserve it.
So, let them be a light for you when all other lights go out.
Investor = Capital Mine
Some businesses only need one funding round. Some businesses go through many as part of their growth strategy. It’s not always clear which business yours will be. But it would be naive to think that you’ll never do another round.
And who are likely to be your hottest leads for later rounds?
Your existing investors of course!
They will want to avoid dilution and help the company in which they’ve invested grow. Additionally, they will want to bring on more people to invest. It’s in their interest, after all, to support the company in its growth.
That said, there’s no guarantee they will want to invest more or bring their friends on board. If you haven’t fostered the relationship and kept the excitement burning, they may want to cut their losses.
But, if you’ve kept them sweet with exciting updates, they’ll be champing at the bit to buy in and involve their network.
Finally…
It’s good business practice to update your shareholders regularly. (Once a month is optimal and what the companies in my examples below go for). Good habits breed good habits. The more you force yourself to go through the motions of running a business properly, the more ably you will run the business, until it’s second nature. And, all of a sudden, you’re a business leader.
So, how then should you update investors?
It’s quite easy really. There’s a formula you can follow each time. Just have the relevant info ready for each section and input when your update is due:
Intro:
Open with some positive statement about the exciting times the company has been going through since the last update. This should set the tone of the email.
Overview/Highlights:
Investors are almost always busy people. There is no guarantee that they will read your whole email. In this overview, give the main points you want to put across. This should give them enough info to feel enthused about you and their investment without having to read more. It also serves a secondary purpose – it should entice them to read the rest of the email!
e.g.
– Revenue is up XX%
– New Product ABC is in the final testing phases. Watch this space.
– We closed two new major partnerships with Huge Brand X & Huge Brand Y.
– Big Deal XY joined the team/board. He/she will….
Key Metrics:
Your key metrics are the figures that show your concept works. They are the essential validation on which investor confidence hangs.
These figures will differ from company to company, but your presentation of them is the same.
e.g.
We’ve seen impressive momentum across our key metrics. KPI 1 has grown XX% month-to-month. KPI 2 has grown XX% month-to-month. We are on course for a huge {insert current month}.
This information can be displayed in a graph. Hopefully, one that looks like this:
Fundraising:
If you’re raising money, give details. You may want to indicate the impressive people/funds you are in talks with; and how far advanced the talks are.
You can also include your latest deck as an attachment. And invite them to take a look. Don’t forget to engage them directly by asking for feedback or to share with any contact who may be interested.
Learnings:
Investors may also be interested in your personal growth as a management team. So, details of any findings from tests, campaigns and product launches will make interesting reading. They may also encourage investors to give advice.
Team:
If someone on the team has had a big impact, you could shout about it here. The employee will thank you for it! It also adds to the general impression of accomplishment and progress you should be conveying throughout the whole email.
Future:
What are the plans, challenges and targets for the next period? Keeping the goals of the company in front of your investors is a great way to keep them aligned with your interests. And it will demonstrate that their investment is in competent hands.
Don’t hold back from requesting advice on any of the challenges ahead. Delve into the acumen of your investors and all the while keep them engaged.
There you have it. An important task fulfilled with minimal hassle.
It’s important to note that this formula is not prescriptive. Only mention sections that are relevant. There may be sections specific to you that you want to add too.
These emails do not have to be long (more on this in the examples below). Short and sweet will suit investors. But make sure you cover the essential details so investors don’t feel shortchanged.
There is no excuse. And, as we’ve seen, the upsides are huge.
Some Real-world Example Updates
This update from Sweatcoin is a masterclass in keeping it ‘short and sweet’. No bluster. No fluff. Just hard traction. It’s easy for them because they are growing so fast (they’ve added another million users in the last month!).
(Make sure you zoom to 90% or so to read it clearly).
Click to view Sweatcoin investor update
ScreenCloud’s is a longer piece which follows our update template more closely, making good use of HTML to give clear structure. Note how they give that important overview section for those who don’t read long emails!
Click to view ScreenCloud Investor Update
It’s worth saying that both companies do a good job of creating a sense of excitement and progress. They go about it in different ways, perhaps due to time constraints and what they find manageable. The point is that the info and the impression put across in both is excellent.
N.B. All this advice works as a template for keeping prospective investors interested; and investors you never closed too – make them feel like they missed out!
That’s all for now. Hope you found this useful!