Each week, I get investor updates from more than two dozen companies we support at Ryerson Futures. Some are good, a few are bad, and even fewer are ugly. Investor updates, like all  stakeholder communications, are not just a responsibility but also an opportunity: an opportunity to connect with supporters, ask for support, and most of all to crystalize the current issues facing your venture. 

Investors usually require regular updates from founders, but in truth, investors expect you to be updating them proactively. In fact, when a startup goes quiet, that is when I generally become concerned. In the world of entrepreneurship, no news is never good news. 

The Benefits of Investor Updates

The best investor updates I get come from  Shoelace, a SaaS ecommerce startup our fund has invested in. Each month, not only do I feel confident that the management team is killing it, but I'm engaged and ready to open my network of contacts to assist with the struggle at hand. According to Reza Khadjavi, CEO of Shoelace, there are a few additional reasons why entrepreneurs should generate regular monthly updates:

  1. It keeps you accountable. If you're committed to monthly updates, you'll be constantly focused on doing good work to generate meaningful progress to share. 
  2. It maintains your rhythm. "Writing a monthly update provides a nice cadence to consistently track the output of your work," Khadjavi says.
  3. It shows your ability to execute goals. Unlike on Shark Tank, most investment decisions are not made based on a one-time encounter. Stakeholders often take a "wait and see" approach, tracking the execution of the business over time to see if you were accurate in your goals, and if you're able to deliver. 
  4. It keeps you top-of-mind. Writing consistent updates is a great way to make sure people in your network remember you exist. "This can cause your name to come up more frequently in conversations and lead to serendipitous introductions," Khadjavi says. I can attest to this: sometimes I'll receive an update from a founder and it sparks something later that day, and voilà, an unforeseen connection is made. 

What Investors Look For

As an investor and mentor, I look for the following in any investor update. Failure to provide all of the below generally leaves me less satisfied in the startup that sent it.

  1. Be transparent. Never lie, misrepresent, or embellish in your communications. If you have screwed up, own it, share it, and suggest what you have learned. We all make mistakes, but to be the best, you need to learn from them.
  2. Be proactive. Never avoid an issue. If there is a problem, big or small, it is always better to get out in front of it than to wait for a board meeting. If there is an issue, share it honestly and explicitly and discuss how you plan to address it. Remember, investors--like all stakeholders--require you to be reasonable, not always right. 
  3. Show lines, not dots. This is a big one. Investors want to see trend lines, not data points. For example, "percentage revenue growth month over month" is a useful line, whereas "revenue this month" is a solitary dot. More importantly, share your thoughts on what caused the change, and how that change compares to prior month-over-month numbers. 
  4. Be action-oriented. Save the fluff for marketing. Updates are about actions taken and actions about to be taken. Stick to objective facts, not subjective adjectives. Don't tell investors "our clients love us"--show that user churn month over month is shrinking.
  5. Ask for something. Your investors are stakeholders with a vested interest in your success, so ask for help. If you need an introduction to a potential customer persona, need to find candidates for a sales position, or want help with anything, ask.

Investor updates are often mandatory, but instead of a burden, you should see them as an opportunity: to be accountable, to stay top-of-mind, and to remind your investors why you are solid entrepreneur to back. So make the most of this opportunity and send out a monthly update today.