The Founder's Guide to Writing Effective Investor Updates
As a repeat founder and active investor, I've seen countless investor newsletters—both good and bad. Writing an effective update is one of the most high-leverage activities a founder can engage in! The impact for effort is incredibly high, yet surprisingly, few founders do this well. This field guide will help you craft updates that keep your investors informed, engaged, and ready to support your venture.
Key Principles for Effective Investor Updates
1. Consistency is Key: Commit to a regular cadence, preferably quarterly. Matt Blomstedt (Springtime Ventures) says monthly might be best during the PreSeed stage when so much is in flux.
2. Cast a Wide Net: Include not just current investors, but potential future investors and influential contacts. This will really help you when it comes time to raise again as you’ll have an audience that’s already warmed up.
3. Keep it Concise: Respect your readers' time with brief, impactful updates. They should be able to get the gjist in 2 minutes or less.
4. Balance Good and Bad News: Share both successes and challenges to build credibility. Jessica Moon (Going VC) recommends adding one sentence on how you are tackling the challenges.
5. Ground Your Update in Metrics: Provide key financial and operational data. Avoid being too fluffy or sales-y. Your goal here is to build credibility and to keep your relationships warm for when you really need them in the future.
6. Always Include a Call to Action: Give your investors ways to contribute beyond capital. For example, note an upcoming hire or ask for a specific intro.
7. Express Gratitude: Never forget to express gratitude for the incredible opportunity you have been given to build what you dream.
Anatomy of an Effective Investor Update
1. Executive Summary
Start with a brief (3-4 sentences) overview of major developments and preview your "ask" for assistance. This section is crucial—it's often all a busy investor will read, so make it count.
2. Mission and Current Objective
Remind readers of your company's mission and current primary objective (e.g., reaching cash flow positive, expanding to new markets). Also, include a link to your latest pitch deck.
3. Functional Updates
Provide concise updates (3-4 paragraphs total) on key areas:
- Product/Technology: Note new features, improvements, or learnings.
- Sales/Customer Acquisition: Note new partnerships or include a link to a testimonial video.
- Team/Hiring: Explain new team members already hired and open positions.
- Market/Competition: Compare & contrast your product/service with others.
Include both positive developments and challenges in each area. This balanced approach builds trust and credibility.
4. Financial Metrics
Share key financial data such as revenue, customer count, burn rate, and runway. Be transparent about your financial position. Peter Callister (Mountain Crest Investment Partners) recommends using 2-4 consistent financial metrics that help tell the story of where the startup has been and is going.
5. How Investors Can Help
Clearly articulate ways investors can support you beyond funding. This could include customer intros, product feedback, or strategic advice.
6. Open Invitation
Conclude by inviting investors to reach out with questions or for further discussion.
7. Putting it All Together
By following this structure, you create a newsletter that:
Quickly captures attention with key information
Provides a comprehensive yet concise update on your business
Builds trust through transparency
Engages investors by giving them ways to contribute
Opens the door for deeper conversations
Remember, your newsletter is not just about sharing information. It's about building relationships and setting the stage for future support. By consistently delivering valuable updates, you keep your company top-of-mind and position yourself for success when you need to rally support or raise additional funds.
Now, here's an example update for an AI writing assistant company focused on law practices:
Subject: Q2 Update - LegalScribe AI: New Features, Key Hire, and How You Can Help
Dear Investors and Supporters,
LegalScribe has had an exciting quarter with great customer growth and some exciting new hires.
Quick Update:
- Launched advanced contract analysis feature, driving 30% MoM user growth
- Hired Sarah Chen as VP of Sales from LexisNexis
- Burning $100K/month, 18 months runway remaining
- Need introductions to AmLaw 100 firms for pilot programs
LegalScribe AI Mission: Empower lawyers to work smarter, not harder, through AI-assisted legal writing and research.
Current Objective: Achieve $1M ARR and expand our customer base to include 5 AmLaw 100 firms by EOY 2024.
Product & Technology:
(+) Successfully launched our advanced contract analysis feature, enabling automatic risk assessment and suggestion of standard clauses.
(-) Experienced some stability issues during peak usage times; working on infrastructure
improvements.
Sales & Customers:
(+) Grew to 150 law firms using LegalScribe AI, up from 115 last quarter.
(-) Customer acquisition cost increased by 15% due to more competitive PPC landscape.
Team & Hiring:
(+) Thrilled to welcome Sarah Chen as our new VP of Sales, bringing 15 years of legal tech experience from LexisNexis.
(-) Still searching for a senior ML engineer to lead our NLP team.
Financial Metrics:
- MRR: $65,000 (up 30% from last quarter)
- Customer Count: 150 law firms
- Burn Rate: $100,000/month
- Runway: 18 months
How You Can Help:
1. Introductions to decision-makers at AmLaw 100 firms for pilot programs
2. Feedback on our new pitch deck (attached)
3. Recommendations for senior ML engineers specializing in NLP
As always, I'm available for any questions or discussions. Thank you for your continued support in our mission to revolutionize legal writing with AI.
Best regards,
[Your Name]
Founder & CEO, LegalScribe AI