Insight
Writing a regular investor update is one of the most impactful things a CEO can do. Failure can have damaging consequences. Getting the update right isn’t hard, but it requires focus and discipline. Let’s look at the key components of investor updates done right.
Communication is the essence of good leadership. You need to take every opportunity to clearly define your vision in a way that inspires and empowers the people around you. That includes investors, advisors, employees and even customers.
Investors will scrutinize details of your company’s performance, so the update will require transparency, precision and focus. A well-crafted update will also serve you in other communications contexts, including executive staff and all-employee meetings. Perhaps most importantly, a good update cadence allows you and the board to have more strategic discussions since the underlying metrics have been communicated already.
Everyone who needs to align with the company and its mission, including investors, advisors, mentors, executive staff and employees. This is confidential information, but it is your job to empower stakeholders with information so they can help the company succeed. It is usually best to update the board first.
Best practice is for CEOs to send updates monthly, not more than 2-3 days following the end of the month. Keeping a regular, predictable cadence communicates CEO and staff discipline. See: Setting Up for Operational Velocity
The content will reflect your company’s stage of development, priorities, challenges, needs and culture. Look at some of several good templates online (like this one or this one) before creating your own template. Maintain consistency but adjust as the company grows and changes.
The example below illustrates a typical update from a mature company. This one comes from a post-Series B CEO leading a team of 70. Your update may very differ. (I have edited the update to remove identifying references.)
Dear investors & advisors,
Here is an update on our last month.
KPIs
- Run-Rate Revenue (est): $18.11M (+0.6%)
- Net Revenue Growth: +$9k MoM
- New Customers: 34
- Total Billed Customers (est): 837 (+2)
- Team: 70 (unch.)
- Units Added: 504 (+62)
- Cash: $13.6M
- Cash Burn (est): -$519k
Chart of the month: Here's a look at our MRR & cash flow for H1. We're still going through the painful but necessary business model pivot of 2019, so our MRR, which is a combination of subscription revenue+PAYG, is mostly flat to down (-3.27%). Pay close attention to the inflows/outflows. We burned ~$18k in H1 (see highlight below).
Screen Shot of chart
Key Events [redacted short summary]
Highlights [redacted bullets]
- H1 cash management. In the midst of a global pandemic and a risky business model pivot we burned only ~$18,000 in cash during the first half of 2020. Before the pandemic started we had already started running lean and mean with a focus on cash preservation. After the pandemic began we dug in and made "cash is king" a company-wide effort.
Lowlights
- [Customer] Lost. We lost [Customer], who was in a Pay As You Go plan ($4k/mo), to competitor [X]. [X] offered [Y] an added level of service with project management, which was attractive to [Y] and not something [X] offered or is considering offering. This service gap + loss of our executive sponsor was a difficult hurdle to get over. We need to get better at building multiple internal champions that have power and influence.
Thank you!
[CEO]
The example is unflinchingly honest about the company’s successes and failures. It demonstrates discipline, insight, a firm grasp of reality and provides inspiration. This company survived the pandemic and subsequently exited in a $250M+ sale of the business. This was in no small part due to the CEO keeping stakeholders aligned and empowered.
Want to talk about investor updates in more detail? Please schedule time or reach out via email.
I started my career as a technology companies lawyer, but soon joined the startup world and began a 20+ year journey as a business leader running go-to-market, product development and business operations for a series of companies including Yahoo!, Demandforce, Intuit, Logikcull and Zenoti. During that time I led teams through good times and bad, raised money, bought and sold companies. Recently I returned to the firm to lead our Greenhouse program, which provides free personalized business coaching for our seed stage clients.
Clients I've worked with: Logikcull | XP News | Vala