Should I send out investor updates?
Takeaway: Yes, in general you should send out periodic investor updates. This helps keep your investors apprised of the company’s path and strategy as well as helps connect them in the event they are able to assist the company with any challenges it faces.
After raising capital, one of the key responsibilities of startup founders is to maintain open lines of communication with their investors. This includes sending out periodic investor updates, which can serve as a valuable tool for keeping investors informed about the company's progress and fostering strong relationships. In this post, we will discuss the benefits of sending investor updates, what information to include, and how frequently they should be sent.
Benefits of sending investor updates
Transparency and trust: Regular updates help build trust and transparency between startups and their investors. By sharing both successes and challenges, founders demonstrate that they are committed to keeping their investors informed, which can lead to stronger relationships and increased investor confidence in the company's leadership.
Accountability: Periodic updates serve as a mechanism for holding the management team accountable to their goals and milestones. By providing regular progress reports, founders can demonstrate their commitment to achieving their objectives and show that they are making effective use of the funds they have received.
Feedback and guidance: Investor updates offer an opportunity for founders to receive valuable feedback and guidance from experienced investors. By sharing key challenges and seeking input on strategic decisions, startups can leverage their investors' expertise to help address potential roadblocks and improve their chances of success.
Ongoing investor engagement: Regular updates help maintain investor engagement and interest in the company's progress. This can be particularly important when it comes to raising future rounds of funding, as engaged and informed investors are more likely to participate in follow-on investments.
What information to include in investor updates
While the specific content of investor updates may vary depending on the company's stage and circumstances, some key elements to consider including are:
Financial performance: Provide a high-level overview of the company's financial performance, including revenue, expenses, cash position, and burn rate. This allows investors to assess the company's financial health and progress towards profitability.
Operational updates: Share updates on key operational milestones, such as product development, customer traction, and market expansion. This helps investors understand the company's growth trajectory and progress towards its strategic goals.
Challenges and opportunities: Discuss any significant challenges the company is facing, as well as potential opportunities for growth or improvement. This helps investors understand the context in which the company is operating and can lead to valuable insights and guidance.
Upcoming milestones and goals: Outline the company's short-term and long-term objectives, along with any milestones that the team is working towards. This provides investors with a clear understanding of the company's priorities and allows them to track progress over time.
Frequency of investor updates
The frequency of investor updates may vary depending on the preferences of the founders and investors, as well as the company's stage and specific circumstances. However, a common practice is to send updates on a quarterly basis. Some startups may choose to provide more frequent updates, such as monthly or even weekly, depending on the level of detail and engagement desired.
Conclusion
Sending periodic investor updates is an important practice for startups that have raised capital. By maintaining open communication and providing regular updates on the company's progress, founders can build trust and transparency with their investors, while also benefiting from valuable feedback and guidance. Ultimately, keeping investors informed and engaged can contribute to the long-term success of the company and improve its chances of securing future funding.