How to write your investor update email

Having a clear structure in an investor update email is helpful both for founders and investors as it allows them to stay in sync and measure progress on the topics that matter.

It is also important for founders to make the effort and share news with candor even though they may find it easier to talk about the best that happens in their companies and downplay the fails. It’s understandable, yet at the same time one can see why this lack of transparency results in building wrong expectations, therefore delaying reaction and helpful feedback or support from investors.

But let’s take it from the beginning: the monthly update to investors is a recurring (typically monthly) communication, where the founder reports major developments along with the agreed KPIs (Key Performance Indicators). There is a wide variety of update structures, spanning from a two-liner along with the link to a dashboard, to an extended two-page text discussing in more detail everything that happened during the past month.

Before we dive into the optimal (in our opinion) update structure, let’s summarize the role this update plays to the business and the relationship, as Apostolos described in a previous blog article.

In a nutshell:

1. The founder can monitor progress in a consistent, systematic way and use this information to identify potential challenges

2. The investor has a clear understanding of the current state of the company and can provide help where needed

3. The relationship stays strong, transparent, and both parties are on the same page at all times

An effective update would mention the 2-3 most important updates in the first sentence, then it would have a few KPIs and bullet points for each function of the company and lastly, it would summarize any additional topics at the end. There is no need to over expand, as the point of this update is to get a high-level overview of the progress and not to dive deeper into every decision.

Start with the big news, the elephant in the room. Whether it’s a good month or a bad one, focus first on what stands out and affects your business the most. When things aren’t smooth, always include the reasons for it and actions taken to fix them.

Examples of introductions could be:

• This month we achieved $31K in revenue, signifying a 3.5x YoY growth for August. We managed to reduce churn to 2% with the latest CS initiative. We are in line with our targets and maybe there is room for some marketing experiments.

• This month we had a drop in revenues (-10% MoM) and new users (-8% MoM) due to seasonality. It’s totally expected and we are not worried about it.

• This month we tried a different onboarding process that allowed users to sign up for a demo with no interaction from our reps. Apparently, our UX was too complicated for this and it resulted to a 20% drop in our signups. We will revisit the self-service sign-up after we improve the UX based on the feedback we got.

What might come directly after the big news, is a list of the Key Performance Indicators you monitor. These are the drivers of your business and you have probably agreed on the most important ones with your investors from the beginning.

An easy way to monitor KPIs looks like this:

Revenue: €49Κ vs €42K last month (17% ΜοΜ, 3.3x ΥοΥ)

Where you get an overview of the important information in one line: the KPI’s value for the past and previous month and the growth month-over-month and year-over-year.

Following the KPIs, there should come 2-4 bullets per (relevant) function (Product, Marketing, Tech, HR, Bus Dev/Partnerships, Fundraising etc.) to pinpoint the developments and high and low lights of the month. Always include numbers when applicable.

Bus Dev / Partnerships

• Closed the deal with Company X, we expect to finish the integration in their platform by mid-September

• Company Y deal is stuck, probably to the X decision maker. Do you have a contact that could help?

• Currently in the partnerships funnel: 12 medium and 3 big companies, we expect to close 3 small ones in the next two weeks that will result in MRR growth of X%

Marketing

• Our SEO consultant finished the audit and we started implementing her suggestions. We expect to see results on our average rank in the UK after 2-3 months

• Our CPA was higher this month (€6.4 vs €4.8) due to increased spending on PPC to capture the X event. With a total spending of €8.5K on Facebook and Google Search we got 1,328 new signups (vs 912 last month)

• We also saw a rise in organic reach (~10K visitors from direct and organic) mainly coming from the contest we hosted during the first week of the month

HR

• We hired a new developer, John, to help the front-end team. He will join us on the 1st of December. He has worked with ABCD for 3 years LinkedIn, leading a team of 8

• We have identified three good candidates for the BD position in Athens, conducting final round interviews this week

Then, the last part of the email can be dedicated to any other matters you want to share with the investors, like an introduction, a question, any help you want to request (for example in hiring, fundraising, PR etc.) or just an agenda of your next meeting.

Regarding the transparency level of the update our suggestion is to be straightforward and candid. There’s no point in sugarcoating a mistake or a bad outcome, in any case it will show up eventually and most importantly it delays reaction from investors.

It is normal and expected for a startup to have ups and downs however what is not ok is delaying communication of bad news or points of concerns that have risen. The earlier investors realize the issue the more time they have to come up with suggestions and solutions. Additionally, a delayed communication of bad news to investors has an impact on the relationship as it affects the trust level.

Sending a succinct, clearly structured and candid update is crucial in maintaining a healthy relationship with your investors. Managing investors’ expectations and communicating bad news early on is important because in dire situations only current investors can support a startup with new funding. They will be more eager to support if they trust the founder’s business judgement and ability to proactively read the market conditions.