As we are often the first investors in our startups, we find many are new to investor updates emails. We don’t force a template on companies, but do provide them with guidance when they are missing some items, or haven’t yet started to write them.
What’s great about the discussion is how it forces founders to really think about what is important at their given stage. For those that are still building out the product, the updates are very much about product development timelines, beta feedback and any early indicators of fit.
For those that have their MVP done, it is more about beta users, pilots, customer and user referrals. Any early indicators of customer validation is a great help.
And for those that have paying customers, it starts to focus more on revenue, retention, growth, and even CAC and LTV where that data is starting to become clear.
In all of these cases we like to see founders start with some qualitative measures of their goals and the trend on these numbers.
How many users signed up to a waiting list isn’t always a good number to look at (yes sometimes it is…) but user time spent in the product, referrals, retention metrics are often helpful.
Of course as a startup, cash is critical so updates should always have cash on hand, burn rate, and projected out of cash dates outlining when fundraising needs to start.
Finally, all founders should include an ask of their investors and stakeholders. In most of our updates, it is something like:
“What do we do again”
And
“How you can help”
This part changes over time, from hiring needs, to pilot opportunities, to user interview and discovery.
What often follows this line is a “thanks to Mary, who helped us find a great product lead”. This helps encourage others to step up among other things.
How often should these go out? In the early days, monthly updates are best. Things are changing rapidly and companies might only have 12 months of cash left when that first round closes.
And finally, first time founders sometimes don’t like to include potential bad news. Every single company has had periods of tough times. All of them.
But the one thing worse than bad news, is a bad surprise. Share your progress, share your issues, and share how your investors can help.
That’s what they signed up for.