What the heck is an investor update?
Any mentor worth their salt might have told you that they’d like to receive an update of your progress from time to time. And that’s where an investor update comes in. As a startup, we initially didn’t realise the importance of consistently sending an update out.
You don’t normally think about these things, and if you do, it’s probably not at the top of your to-do list. It’s something we learnt, and were pushed aggresively to adopt as part of our workflow, at Ignite, the accelerator programme we joined end of last year. In hindsight, it was a pretty important lesson, and one that made a world of a difference even before we graduated from the programme end of February.
Now investor updates aren’t necessarily just for your investors, or even potential investors — think of it as a newsletter of sorts, a way of updating your very own little tribe, so include the folks whose opinions you trust, as well as the folks who will champion you and advocate for you wherever they might be going. They don’t need to be lengthy or complicated emails either — the shorter the better, the less fluffy the better.
Say you meet someone along your startup journey whose opinion you really trust, or really gets your vision — make sure to ask them whether they’d like to receive investor updates from you at the end of your meeting. In fact, if they really like what you’re doing, they might ask you first, and that’s always a positive sign.
It’s really one of the most important things you can do for your startup as a founder.
Why are investor updates so important?
- they show momentum, even if you think things may not seem to be going so well at the moment
- they allow you a safe avenue to ask for advice from a trusted group of people
- they keep you top-of-mind with current investors and folks who may become investors in the future
Wait, so I write one even when crap is hitting the ceiling and everything is going wrong?
Hell yes. It’s important to start building relationships with future investors as early as possible. Keeping them updated on progress shows them that you can consistently keep the momentum going.
As one angel aptly puts it, “If I stop getting investor updates from you, I’ll assume your startup is either dead or going to die.”
And that’s why it’s so important to send these missives out, even if all you have are numbers that don’t seem to be going up no matter what you do, users you just don’t seem to understand, or a product that you think should probably be built from ground up. Your future investors invest in lines, not dots. Plus, asking for advice as part of your update allows them to chip in with (hopefully) constructive feedback. Because they’ve been following you from the start, they’ll know to dive deep, shaping their feedback to best fit the snapshot of your current situation, as opposed to your going out to get shallow surface advice from a totally new mentor.
Note that we said future investors. You’re probably most definitely not going to raise at your very first meeting. Making promises of progress, and keeping them, shows your future investors that you mean business. Then they’ll feel enough assurance to give you the moolah when the time comes.
Ask for advice, get money. Ask for money, get advice.
As for the top-of-mind thing, put yourself in the shoes of an angel. Startups clamour to work with you, each and every single day. You probably get asked to meet a few hundred, if not thousand — and not everybody will be memorable. In fact, most of them won’t be. Investor updates are a reminder of your presence, and make it easier for them to remember who you are, where you’re at, what you need, and who they might be able to introduce to you to build your network and theirs. Imagine your angel self going to dinner with a bunch of other angel friends, checking your inbox over curry, and finding a request from a startup that heyyyyyyy, your friend next to you could totally help with.
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This post was written by YeeMun Thum, @thumyeemun, Entrepreneur in Residence at Potential VC. An ex-digital agency content strategist + corporate affairs manager from Malaysia, she is co-founder of UK online subscription eyewear startup @ScarlettofSoho. She likes pugs, iced coffee, and helping startups wherever she can.