How to use investor updates to next-level your fundraising strategy, plus what to write and how often to send them.
When was the last time you sent out an investor update? Has it been a month? Six months? So long you can’t remember?
It’s easy to push investor updates to the back burner when you’re in the weeds of building your startup, growing a team, and raising capital. But these regular communications are one of the most important tools in your fundraising toolbox.
For more than 20 years, I’ve built a career around raising capital for startups — as an investment banker, a startup consultant, and the creator of Foundersuite, a software platform to help founders manage their investor pipeline.
Here are my top hacks for creating investor updates that take your fundraising to the next level.
Why should I send investor updates?
Raising capital for your startup is about forming investor relationships that are often nurtured over months or years before anyone writes a check.
As venture capitalist Mark Suster of Upfront Ventures writes, investors “invest in lines, not dots.” It’s incredibly rare for an investor to decide to fund a venture at the first meeting (picture a single dot on a timeline), but when there are multiple touchpoints (picture many dots connected by a line), an investor can begin to see the trajectory of a company’s performance and make a decision based on context and confidence.
Whether you’ve met with an investor or not, sending regular investor updates begins to flesh out that lonely dot into a line, hopefully one that is pointing in a direction the investor would like to go.
After an investor writes a check, founders have a fiduciary responsibility to keep investors up to date, and investors may mistake a long period of silence as a sign that the company is not faring well. Investor updates also offer an opportunity to share wins and ask investors for help with challenges.
Ultimately, well-written updates signal to investors that you as the founder can consistently make plans for the future, execute on those plans, and report back on the results.
What should I write in my investor update?
There are two distinct audiences for investor updates — prospective investors in your pipeline and existing investors who have already written a check. The content for each of these audiences needs to be different, though there will be some overlap.
One of the biggest mistakes I see founders make with investor updates is sending long blocks of dense text that no investor has time to read. Make it short and easy to skim. Keep updates for prospective investors to less than one page. Updates for your existing investors will be more detailed, but should still be short.
Updates for prospective investors
When it comes to the investors you are nurturing for future rounds of fundraising, think of your updates as a marketing tool. Use them to sell your vision, and keep the focus positive.
- Open with a brief company summary. This can remain static from one update to the next, and it’s a good refresher for VCs who may not yet know you well.
- Share your wins in a bulleted format.
- Include key metrics, and indicate how they are changing over time. Limit this section to 3-6 KPIs.
- Mention what’s new or what is coming up next.
- Add a team photo to reinforce who you are and what you do — this is great for relationship-building.
Send updates to prospective investors monthly if you can, or at least bimonthly or when there’s exciting news to share. Send your update to your entire funnel — include anyone who hasn’t yet told you to go away!
The back catalog of these updates is a great piece of sales collateral to bring to your first meeting with a new investor, as it illustrates the “line” that led up to the “dot” of the initial conversation.
Updates for existing investors
When it’s time to update the investors who have written you a check, you’ll want to share many of the same wins and KPIs. But this type of investor update will also include some of the more sensitive parts of your business such as challenges and areas where you could use support.
- Summarize what has happened since your last update. Product launches, new hires, active recruiting, press mentions, and milestones are all great topics to touch on.
- Include challenges or problems that you’re facing.
- Think strategically about where you want investors’ help or advice. One of the reasons you accepted funding in the first place was to align your company with smart, well-connected people, and updates are a great way to activate those relationships.
- Thank investors who have helped you by name, in bold! Seeing others acknowledged for their contributions can motivate other investors to step up to help.
- Be sure to communicate how much runway the startup has left. It’s vital for investors to know when they will need to write another check or open up their Rolodex for you.
Send updates to existing investors quarterly, or more frequently if problems arise.
#1 Funding Hack Of All Time: Start The Update Process Early
One of the best things you can do for your fundraising efforts is to create your mailing list and begin sending updates as early as possible – ideally, 6 to 12 months+ before you plan to start your raise.
As you identify investors you want to nurture or encounter people in your networking, reach out with a soft ask along the lines of — “I’m not raising money right now, but you’re right in our sweet spot. We send out a monthly update and I would love to add you to the list so you can have a sneak peek.”
Spoiler alert: All investors want early access to good deals! Use this to your advantage to add them to your distribution list and begin forming that relationship well in advance of your next funding round.
Where a cold pitch for funding will usually fall flat, fewer people will turn down a cold ask to be added to a mailing list.
5 (more) hacks for better investor updates with bigger impact
Put investor updates to work for your startup with these insider tips:
- Block off time on your calendar every month to reflect on your business from a 50,000-foot view. Write down what’s good, what’s bad, what’s working, and what’s not working. Not only will this give you great content for your investor update, but it’s also a healthy habit to develop as a founder.
- Do you know who is reading your updates? Tools like Foundersuite and many email platforms allow you to see who is clicking on your updates and sometimes how long they spend reading it. Make note of which prospective investors are paying attention — they will be your most likely buyers.
- Broaden your distribution list to include your entire support base — fellow founders, your sources of moral support, and especially anyone who could be of help with recruiting or introductions down the road.
- Upload your mailing list of prospective investors into Facebook and deliver them brand-based retargeting ads so they are seeing information about your company more frequently. (Be sure to abide by all the advertiser rules and privacy regulations.)
- Learn from other founders. Listen to my interview with Eva Goicochea of Maude on the How I Raised It podcast where she shares some of the impactful ways she uses investor updates.
Investor updates are so much more than an obligation — when done well, they can be the secret weapon in your fundraising arsenal.
Nathan Beckord is the CEO of Foundersuite.com which makes software for raising capital. Foundersuite has helped entrepreneurs raise over $3 billion in seed and venture capital since 2016. This article is based on a talk Nathan gave at the Fulcrum Venture Accelerator in April 2021.