In April 2020, venture capitalist Elizabeth Yin (general partner at Hustle Fund, former partner at 500 Startups) put out a poll on Twitter:

“What proportion of your portfolio companies write you at least quarterly updates beyond the first year without a reminder?”

Over 200 investors responded.

Of those, around 60% receive regular updates from less than half of their portfolio companies.

As I think about our own companies in the Hustle Fund portfolio, these numbers aren’t that surprising.

What is surprising, though, is that startup founders don’t seem to realize the value that comes from sending update emails to their investors.

Why updates are so important

Hustle Fund has invested in over 135 companies (as of May 2020).

Most of those companies only email us when they need something… usually that means introductions to potential investors, candidates for jobs, or strategic partners.

But here's the thing.

If we haven’t heard from a startup in many months, we don’t really know what’s going on with that company.

And if we don’t really know what’s going on with a company, we’re probably not going to make those introductions.

That’s because we don’t know for sure which introductions will be most lucrative for both parties.

And we’re not going to introduce a founder to a bunch of valuable contacts if we aren’t confident that the introduction will be valuable for both the startup and the third party.

That’s not a good use of our time, the founder’s time, or the third party’s time.

And we don’t want to wear out our relationship with the third party by introducing them to companies that are going to waste their time.

Think about it… if you haven’t heard from Joe Smith since 2000, and then out of the blue he asks you for an introduction to the VP of Marketing at Facebook, would you feel confident making that introduction?

Probably not.

On the other hand…

Startups that send regular updates about what’s going on with their companies are in a much better position to ask for help.

Investors would rather hear the good AND the bad stuff a company is facing rather than hearing nothing at all.

This is because, when an investor has a holistic understanding of how a company is doing, they know just what introductions will help that company succeed.

Plus, startups that send regular updates are top-of-mind when investors meet people who could be good strategic partners.

How to write a great investor update

There are two elements to sending great investor updates:

#1: Frequency

We recommend sending your investors a company update every quarter.

Some investors may prefer to get them on a monthly basis, but quarterly is more common.

If you opt to send them quarterly, we recommend sending them at the end of the quarter, so you can speak thoughtfully about what the company has accomplished, where you’re struggling, and what’s coming up next.

Whether you send them quarterly or monthly, make it a point to send your investor updates consistently (IE at the end of each quarter, at the beginning of each month, etc).

This helps to build trust with your investors, and gives the signal that you are a reliable and consistent entrepreneur.

#2: Content

Your updates do not need to be sophisticated, eloquently worded essays.

Investors would be happy even with a list of bullet points, as long as you don’t sugarcoat what’s going on in your company.

Here are the points we  recommend including in your updates:

How much runway you have left

How many months your runway will last

The biggest challenge you're facing right now

Major changes to the company’s product or strategy. (Did you pivot? Did you launch any new products? Did you hire or fire any key employees?)

Funding raised since your last investor update

Current valuation

Changes to the cap table

Requests: Is there anything you need from your investors?

Shout-out to someone who has helped a lot since your last update. This could be an investor, mentor, advisor, etc.

A few tips to make this easy on yourself

BCC Everyone

Send the same updates to all your investors. No one needs an individualized note to go with their update.

Sending the same update to each investor is totally acceptable.

Just be sure to BCC everyone so you’re not sharing their information without their approval.

Create a template

Every email service has an option for you to create templates.

If you set up your update as a template, all you need to do each quarter is fill in the blanks.

Include relevant links

Did you just launch a new product? Post a new job listing? Release a new version of your website?

Linking to those pages will make it easy for your investors to get excited about what you’re building, and think of ways they can help you be more successful.

Set a calendar reminder (and stick to it!)

Sending your updates consistently is a great way to build trust with your investors.

If you send your updates quarterly, be consistent about sending them right when the quarter ends.

If it’s monthly, be consistent about sending them at the very beginning of each month.

When you send your updates on time, your investors will see you as reliable and trustworthy, and will be more likely to recommend you to other investors and strategic partners in the future.

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