You just closed your $1m seed round four weeks ago, and investors are starting to contact you to see how things are going. After writing a few one-off emails, you realize you need a more scalable process for communicating with people close to your company. What you need is an Investor Update email that you can send to all of your investors and advisors.
I've talked to many founders who want to understand investor updates and their semantics. How often should these emails be sent? Whom should they be sent to? What should they include? What does a sample email look like? This post will attempt to answer all of these questions.
Once a month is a good frequency for investor updates. About 80% of the startups I work with send monthly updates; 15% send updates less frequently (every 2-3 months or not at all); and 5% send updates more frequently (weekly). Waiting more than one month between emails isn't a good idea because a month is a long time in the life of a startup, and it's good to get advice and feedback at reasonably short intervals. On the other hand, sending an update every week or two is a big time burden on the founders, and weekly updates are rarely very eventful.
KPIs (and their month-over-month changes)
- Include 3-5 important metrics here. For example, "Revenue: $12,345 (+35% from last month)."
- Some important areas to measure monthly include revenue, growth, and engagement.
- In addition to product metrics, it's good to mention your monthly burn rate and how much cash you have in the bank.
- Describe notable events since the last update email. For example, "we launched our integrations with Salesforce and MailChimp" or "we finally hired VP of Product, John Doe, who comes by way of Google and Palantir" or "we've been seeing a lot of users who try the product once and never come back, so we're going to focus on user retention over the next two months."
- One good approach is to group these updates into buckets like Great, Good, Bad, and Ugly.
Thank Yous (optional)
- Thank investors who helped you last month.
- Tell investors what you want, whether it's an introduction to a specific person, customer referrals, hiring referrals, product feedback, or anything else. (You can ask for just about anything).
What's the role of each section?
- KPIs (key performance indicators) provide a quantitative, objective view of your startup's health. They provide reassurance when you're doing well and an early warning when you're not.
- Notable events are milestones for your company — both good and bad. They add some color to the numbers the KPI section, as well as describing important events that are unrelated to the KPIs.
- The Thank Yous section is optional, but I think it's useful for both founders and investors. For investors, it's a nice way to get public recognition for your work. For founders, it's a way to nudge investors into helping more (either because they want recognition or because they feel guilty for not being on the list more often). Simple gamification at its finest.
- The Asks section is the most important part for both the founder and the investor. For the founder, it's the best way to crowdsource important tasks. For the investor, it's an easy way to figure out how to help the company out. When it comes to this section, founders shouldn't be shy and investors shouldn't be lazy (or critical).
Some founders only send updates to their biggest investors, but I think there's a lot of value to sending updates to all investors and advisors. You never know when someone can help you, whether they wrote you a $1m check or a $10k check. The easiest way to send out your update is to BCC it to everyone who should get it. Some founders like to use CC instead of BCC for the first investor update so that everyone knows who is on the list.
Here's a full example of a (fictional) investor update for a (fictional) CRM startup:
Here are our updates for this month.
- # of paying users: 40 (+25% compared to last month)
- # of logins/user/day: 1.73 (+38%)
- Users active after 60 days: 37.5% (-8%)
- Employees: 5
- Monthly burn: $42k
- Runway: 19 months
- We were featured in TechCrunch which led to 173 trial customers and 8 new users. [link to TechCrunch article]
- We hired Joe Smith as our first VP of Sales. Joe was a Sr. Director at Salesforce for the last 6 years and graduated from Yale.
- We are still looking for junior front-end engineer. We went to three college career fairs last month and now have 84 potential candidates in our hiring pipeline.
- Our main web server crashed on Feb 23rd and we have three and a half hours of downtime. Several customers called to complain, and we offered them a 50% discount for the month. We will be working this month on improving the fault tolerance of our system.
- We are still looking for a DevOps engineers and don't have many good leads.
- We've been trying to close a deal with XYZ corp for 4 months, and they decided to go with RelateIQ instead of us. This would've been a landmark deal for the company. We've followed up with XYZ to learn what we could have done better and will be incorporating their feedback in March and April.
- Thanks to John E. for referring 3 potential front-end engineers.
- Thanks for Lucy K. for helping us think through our PR strategy.
- Thanks for Joe D. and Kathy R. for introducing us to over a dozen potential customers.
How you can help
- We are looking for a good DevOps engineer. If you know someone who might be a good fit, please let us know.
- We love getting intros to potential customers. Our ideal customers right now are startups with $1m-$10 in revenue and 3-10 salespeople.
- If you have a few minutes, we'd love to get feedback on our newly redesigned Contacts page: [link to Contacts page].
Thanks to Sean Byrnes for reading a draft of this and offering great feedback.