Guide to Writing the Perfect Investor Update

Are you considering updating your investor on the current progress of your company? Well, an investor update is a great way to maintain a strong relationship with the investors in your company by keeping them up-to-date with the progress of your company and making sure they are in the loop at all times. A well-written and well-organized investor update should provide a complete overview of the company’s progress from the time of the last update. The purpose of this article is to discuss the concept of investor updates, the importance of investor updates and provide tips for writing perfect investor updates.

Investor Updates

Before we get into the details of writing investor updates let’s first understand who is an investor and what investor updates are. An investor is an individual who provides capital for a business with the expectation of a financial return in the form of interest, royalties, or, most commonly, an ownership equity share of the company. Essentially, the purpose of raising funds for a business is to accelerate its growth and expansion or to fund a specific project. While investor update is a communication between the investor and the company in which the progress of the company or any other important information is shared with the investors. Are you still confused? Well, the following section is a detailed overview of investor updates.

What is an investor update?

An investor update is simply a report which keeps the investors updated with the company’s progress and highlights the progress over a certain period. It is a report which includes relevant information including the latest achievements, new developments, the progress of the business, pledges and investments received and the plans for the future. In other words, an investor update provides a point of reference for the investors. However, an investor update is only useful for investors if it is timely, accurate and detailed. Most importantly, an easy-to-read investor update template must be used.

Understand the 3 W’s of an investor update

The purpose of investor updates is to provide investors with a clear understanding of the company’s current status and where they are headed over a specific period. Investors provide funding with the expectation that given resources are used to their maximum potential. Here are 3 w’s for investors’ updates:

• Why – At first, you might think why would you even want to create an investor update? An investor update helps to improve communication with investors, shows the level of your commitment, helps to build a strong relationship with investors, and ensures that investors are in the loop at all times. Moreover, it gives complete trust and faith in your ability to deliver on your promises. Overall, it is essential to create investor updates to maintain a healthy relationship with your investors based on transparency, trust and honesty.
• When – Now that you have realized the importance of investor updates, it is crucial to know when to send the investor update i.e. how often you should send an investor update. Usually, sending investor updates quarterly is a good idea, but some prefer sending an update every month. It comes down to your preferences as it depends on the progress, situation, and stage of your company. As a result, you must prepare and send investor updates promptly.
• What to send – Once you have decided when to send the investor update, you must decide what to send. However, it is impossible to include everything in an investor update because it might be not only boring but also hard to read. Instead, make it short yet informative and impressive to read. A good rule of thumb is to think about your investors, their expectations and the nature of their support. Use this to come up with a concise outline that will help you to maintain strong communication with your investors.

Importance of  an investor update

A strong relationship with your investors is essential for your business’s growth and expansion. If you provide them with timely, accurate and comprehensive information via investor updates, they will continue to work with you and contribute towards the growth of your company. Below mentioned are some of the benefits of writing investor updates:

• Better communication – Working with an investor is quite different from other kinds of collaborations. Primarily, an investor can be considered a professional partner because of the type of relationship that exists between them. Investor update in this context is an important tool as it allows for the exchange of timely, relevant and valuable information, keeping the investor up-to-date with the latest news and information.
• Follow up on funding – Most importantly, investors provide funding for your company to accelerate its growth and expansion, and thus they expect their funding to be used to its maximum potential. To achieve this, investor updates can be used to update investors on the progress of their funding, which will in turn, reflect the company’s commitment to their investors.
• Networking opportunity – Investor update is a powerful tool for networking. A chance to stay in touch with your investors, share your experience, and even ask them for their advice is the true value of investor updates. In this regard, an investor update can be used as a valuable opportunity for networking, which connects professionals and business people across the world.
• Talent acquisition – Investors typically have connections with other potential candidates and professionals who could be interested in working with your company. Thus, a great function of investor updates is to reach out to your investors and find new, talented employees. Therefore, an investor update can be a great tool for increasing the pool of talent that you seek.
• Experience and knowledge – Investor update is used to share your experience with your investors in a more direct way. A good investor update template will help you to reflect on what has been achieved, how the company gained momentum and why the investors now want to continue investing in your company. In this way, you can use your experience and knowledge to encourage your investors.
• Reflection and accountability – An investor update is a reflection of where the company is, a “status report” and an opportunity to take a look at what has been achieved in the past and how this will shape the future. Thus, the investor update is a direct accountability mechanism, which allows you to be responsible for your actions, explain what has happened and evaluate your work.

What should be included in the investor update?

Practically, the investor update is flexible enough to be tailored to your own preferences. However, the following are some of the basic points that you should include in your investor update:

• Summary of the Last Period – The investor update should have a summary of the last period, which usually sums up the progress, latest developments and plans. The format of this should be simple, lucid and informative to help investors understand in a very brief manner the current status of your company.
• Launched Products – This part of the investor update provides information about the products or services you have launched in the last period, which reflect your business’s growth. If you have no launched products to report, you can share the status of your product by showcasing the MVP or Minimum Viable Product.
• Key Hires – In this section, you should bring to the attention of your investors the new talent your company has acquired to help you build your team. It could be the recent hires, including their role, skills, experience, and expected return and even mention how the contribution of the individual will be beneficial for your business.
• Milestones Achieved – The investor update should mention the milestones which you have achieved in the last period. This will help investors to evaluate the progress of the company, and also provide a clear indication of what is ahead for the next period. In the case no recent milestones are achieved, the data from the previous pitch deck can be posted.
• Pending Milestones – This part of the investor update is a place where you can add any forthcoming goals that your company plans to achieve. The milestones should be realistic and achievable to reflect the goal of your business. Overall, pending milestones act as a timeline or roadmap for future goals.
• Items You Need Help With – One of the most important parts of the investor update is to let your investors know what you need help with. This will allow them to direct their attention towards something they can help with and thus contribute to your company’s growth. Don’t hesitate to ask for help, as investors can provide much-needed assistance.
• Runway – This section of the investor update directly reflects the financial status of the company and its operating period, which shows the current funds the business has, the burn rates, the company’s cash flow, and so on. It allows investors to monitor their investments and if necessary, investors point out any concerns.
• Summary of Metrics – Conclude the investor update by summarizing the metrics that best reflect the current status of your business. Either bullet points or simple graphics can be used to display your metrics. Thus, metrics should be easy to understand, valuable and impressive to summarize the investor update.

Tips for writing the perfect investor update

The investor update should be concise, precise, and well-written. To help you prepare the perfect investor update template, we have the following tips:

• Gather your data – The first tip is to gather all your data before you start writing your investor update. In this way, you will have a more precise and complete view of the company and its development.
• Review the months – The next tip is to review the past months to bring up recent developments and milestones of your company. Thus, it will help you to structure the content in a very methodical manner, with everything well-organized.
• Include content – The content that is included in the investor update should be up-to-date, and relevant and must provide a clear picture of your company’s progress. Importantly, you must be honest about your achievements and the challenges you are facing.
• Include consistent metrics – It is important to include consistent metrics in your investor update that is the latest, relevant and informative. Metrics that are not consistent are not reliable, as they may lead investors to a false view of the company.
• Consistent format – This tip refers to the formatting of your investor update template, which must be consistent throughout the document. It means that your metrics and figures must be aligned and formatted consistently to give a professional and polished look.
• Commit to rhythm – The final tip is to commit to a rhythm for writing your investor update. Write investor updates on a regular or scheduled basis throughout the year. This will help you to establish a pattern and a rhythm for writing the investor update.

Best Investor update templates

Now that you know we have discussed the concept of an investor update, including its contents and the tips for writing the perfect investor update, here is an excellent investor update template for reference:

• Techstar – Jens Lapinski, a former managing director of Techstars METRO, outlines three factors that he finds most helpful in his portfolio early-stage firm monthly reports in the “Minimum Viable Investor Update”.
• Y combinator – Aaron Harris of Y Combinator created this investor update template. Aaron advises emphasizing repeatable key performance indicators (KPIs) and major requests for your investors.
• Founder Collective – A busy founder might use this investor update template created by the Founder Collective team. Your investor updates will be ready in no time if you only fill out the bolded parts.
• Gitlab – The GitLab team created a six-part template. Designed to allow investors to quickly read and find the information that is most important to them. They aim for concise, clear and consistent communication.

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