Minimum Viable Investor Updates


The following is based on a blog post from Right Side Capital.

For fist-time entrepreneurs, investor updates are thought of as a big challenge, when they don’t have to be. Too often founders put them off until there is good news to share and/or put too much effort into making them look as good as their fundraising materials.

Investors meanwhile are busy, and just a few statistics and a few paragraphs of narrative to feel up to date.

Useful investor updates have three requirements: they must get done, they must be easy to produce, and they must be easy to consume.

Anatomy of an Update

Here are the modules and the order Kevin recommends:

[Company Name] Investor Update for Month Ending [Last Day of Month]

  • Metrics
  • Highlights (Optional)
  • Asks (Optional)
  • Thank Yous (Optional)
  • Commentary (Recommended)
  • Pictures (Optional)

The only required module Kevin requires is “Metrics”. This should be easy to produce because, at any given moment, you should have a handful of Key Performance Indicators (KPIs) you track anyway. This should be easy to consume because most investors have experience absorbing tabular business data, and if you provide the same format month after month, these tables are easy to compare. This should be easy to get done because, in our modern software-driven world, KPIs are at your fingertips. Most importantly, if they are the metrics you are actually tracking to run your business, then they will be reasonably informative to investors. Requirements satisfied!

Everything after Metrics really is optional (but a paragraph or two Commentary is highly recommended). Better to get the update out the door quickly than wait until you come up with something to say for every section. If you ever find yourself thinking something like, “I’ll crank out the Asks later,” stop! Just hit send. Then if you do think of important items later, put them in a notes file and include them in the next update. Or send out a specific Asks email.

Universal Metrics

Now for some depth on metrics. There are really two types: (1) those that are universal to all young startups and (2) those that are particular to your business. Investors need both. The first type gives us a general sense of how things are going for you relative to the typical startup lifecycle.  Kind of like the vital signs that all doctors want to know regardless of patient or condition.  They help us triage our attention. So start with them:

  • Revenues: [month/ quarter]
  • Total Expenses: [month/ quarter]
  • Fundraising Status: [not raising | planning | raising | raised]
  • Fundraising Details: [how much, what structure, who from]
  • Ending Cash: [cash in the bank]
  • Full Time Employees: [including founders]

For the revenue, expenses and cash, it would be nice if you also included last month’s value and if you’ve been running for two or more years, then last year’s value for the given month.  Once you get the hang of that, also compute the percentage change, as that makes it dramatically easier for investors to absorb the data as they skip small changes and focus only on the big changes.

Its those big changes or any big numbers that need an explanation in the Commentary.  The same if you start raising money, raise money, or predict that you’ll be running out of cash in the next six month.

Custom Metrics

Your business should have some KPIs specific to what you do.  Here’s an example for a company that produces cookstoves:

  • Cookstoves: 12,000 (+5% MoM)
  • Briquettes: 45,000 (+12% MoM)

An example for a company that makes loans:

  • Borrowers: 45 new, 124 total (+5% MoM))
  • Total Lending: $450k new, $1.8M total (-2% MoM)

An example for a company that aggregates something from farmers:

  • Farmers: +12 new, -3 old, 495 total
  • Hectares: 65 ha planted (+20% YoY)

Five or ten minutes to toss in some highlights, asks, thank yous and commentary, and that’s it.  No need for logos, graphics, or anything else, but if you have a picture from a recent event, toss that in too, as pictures help investors feel more connected to the company.

Repeat this monthly, 12 times per year, and you’l stand out as one of the best investees, even if your metrics are not outstanding.

Note: Kevin wrote a follow-up post, which includes more good advice, including sending the updates as the body of an email, not as an attachment.

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