Many founders struggle with extracting the most value out of their network as well as maintaining a clear and open-line of communication with investors. After closing a round, it can be easy to get carried away on the day-to-day activities; focusing on growing the business, delivering on expectations, and meeting deadlines.
From an investor standpoint, receiving direct updates is the only way to keep track of your progress and is essential for portfolio management and internal operations. Maintaining a strong connection with investors not only builds trust, but allows for investors to help in the areas where they can bring value.
Being on top of relationship management without certain systems in place can be challenging and time consuming. Thankfully, there are many tools that make it easier to have an open-line of communication with investors without having to manually send out individual emails or messages.
I find that a one-page summary that can easily be updated on a rolling basis such as Notion to be the most effective and simplest way to provide investor updates. Choose a medium that is easy to access, maintain, and read.
Consider that each investor has at least 20+ portfolio companies to keep track of aside from numerous other deals in discussion and additional management tasks. Time and attention are scarce; and like with any other material geared towards investors (pitch deck, data room, etc), the same communication methods remain; frictionless, clear, and simple.
The main purpose of the investor update is to provide an overview on recent company developments; including status updates and upcoming milestones with clear KPIs and time plan.
At a high-level, the investor update should include:
Each section should be kept under short bullet points, which will make it easier for the investor to find all the key information quickly.
<aside> 💡 Adding a short executive summary of your company with your value proposition, vision/mission, and key links (website, social media, etc) at the top of the page is also recommended.
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As for frequency, a good standard and habit is to provide updates at least once every quarter. Depending on your stage, the amount and speed at which new developments and milestones are reached can vary. For pre-seed or seed stage startups for example, monthly updates could be more appropriate, especially when you are working towards a launch and can use all the additional support you can get. (My personal take - the more you communicate, the better!)
As mentioned previously, the base of any investor-startup relation is built on trust. Agreeing to work together means committing to bring value and meet expectations.
Investors take the initial risk and long-term position when investing, in exchange for receiving investment returns upon exit. On the other hand, the partnership allows startups to extend their runway, scale, and progress in their ventures in exchange for a portion of equity or tokens. Both investors and startups have the same incentives to realise increased returns/profits, however, without a clear alignment on how both parties can collaborate to reach this mutual goal, the path to exit can take longer or not happen at all.