Should I send out investor updates?
Takeaway: Yes, sending a regular, concise, and transparent monthly investor update is one of the highest-leverage activities a founder can do to build trust, maintain engagement, and turn your passive investors into an active network of supporters.
Your formal board meetings are the primary channel for communicating with your investor directors. But what about all the other investors on your cap table—your angel investors, the smaller funds in your seed round, and the other VCs who don't have a board seat? It is a common mistake for founders to go dark on these investors between financing rounds.
A proactive, regular investor update is an incredibly powerful and low-cost tool for keeping your entire investor base engaged and aligned. It transforms your investors from a passive entry on your cap table into an active, motivated network of evangelists and helpers.
Why Investor Updates are So Valuable
It Builds Trust Through Transparency: Regular, honest communication builds immense trust. It shows your investors that you are a professional, communicative leader who is on top of the business. This is particularly important when things are not going well. Sharing bad news proactively is one of the best ways to build long-term credibility.
It Activates Your Network: Your investors have vast networks. At the end of every update, you should have a clear and specific "ask."
"We are looking for an introduction to the head of business development at Company X."
"We are trying to hire a senior product manager with experience in Y."
An investor update turns your entire cap table into an outsourced business development and recruiting team.
It Streamlines Your Next Fundraise: When you are ready to raise your next round of financing, the process will be infinitely easier if your existing investors are already warmed up and informed. They have been following your progress for months and will be ready to quickly commit to the new round and to make introductions to other potential investors.
The Anatomy of a Great Investor Update
An investor update should not be a long, rambling essay. It should be a concise, easily scannable email that a busy investor can read in under three minutes. A best-practice format includes:
A High-Level Summary: A one-paragraph "TL;DR" (Too Long; Didn't Read) at the very top that summarizes the key highlights of the month.
Key Performance Indicators (KPIs): A short, bulleted list of your most important metrics (e.g., Monthly Recurring Revenue, user growth, key technical milestones) and how they have trended since the last update.
Highlights and "Lowlights": Briefly celebrate your recent wins. Just as importantly, be transparent about your recent challenges or "lowlights." This builds immense trust.
The "Ask": A clear, specific request for help. Be direct. "Does anyone have a contact at..."
A Forward-Looking Statement: A brief closing statement about your focus and priorities for the upcoming month.
A simple, consistent monthly investor update is one of the highest-return activities a founder can do. It takes less than an hour to write and it is a powerful engine for building the trust, alignment, and network effects that can dramatically accelerate your company's success.
Disclaimer: This post is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading or relying on this content does not create an attorney–client relationship. Every startup’s situation is unique, and you should consult qualified legal or tax professionals before making decisions that may affect your business.