Why Investor Updates Matter More Than You Think
Founder-investor relationships are one of a startup company’s most underutilized resources. Pulley provides a powerful way to get the most out of them.
In the early days, sending investor updates can get lost in the action and excitement of building your company. It can also feel daunting to report on the state of your ever-changing business.
Our advice? Don’t underestimate the importance of sending regular investor updates. Get in the habit of staying in touch. It will pay dividends down the road.
What we’ll cover in today’s post:
- Why send investor updates
- Best practices for investor updates
- How Pulley helps you stay in touch
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Why send investor updates?
Build trust and alignment
Investors can be your company’s biggest advocates. Keep them informed, so they can guide and support your latest efforts. If things get bumpy, they will already have the context to help course correct.
Seasoned investors have worked with hundreds of companies. Getting input early on can mean the difference between a nudge in the right direction and spinning your wheels for another three months.
Tap into their rolodex
Investors are experts at building and maintaining their networks. Here at Pulley, we’ve asked our investors for help with sourcing candidates, connecting us to press, and introducing hard-to-find domain experts.
Access much-needed expertise
Your investors likely have operational or domain expertise. While they shouldn’t act as your strategy committee, they are a great resource for getting smart on an unfamiliar topic.
Stay top of mind
Aaron Harris of YC said it best: If your investors think about you positively and frequently, they'll not only help you with specific requests but point serendipitous opportunities your way. That's one way you can "manufacture" luck.
Bottom line: Help your investors help you. Don’t be that founder who only engages their network when trying to raise a bridge round.
Best practices for investor updates
Sending investor updates can feel daunting. Reduce the stress by keeping updates consistent and concise. Create a process that’s repeatable. Most importantly, start practicing now.
Here are our top tips for investor updates:
- Commit to a cadence
- Pick relevant and comparable metrics
- Don’t shy away from bad news
- Make your asks specific and actionable
In the meantime, here are some answers to the questions we hear most often:
What’s a good cadence?
Monthly updates are a great starting point. Things move quickly when you’re just getting started. As the company matures, quarterly updates become the norm.
What kind of metrics should I pick?
There are two metrics that really matter in the early days: growth and cash/burn. Pick the metric most relevant to your business, such as MRR or user count, and stick to them. Don’t make your investors triangulate hard-to-compare data points.
If you’re not tracking these metrics internally, you should be. Simplify this process by building a company dashboard. Investor updates are simply a forcing mechanism for staying organized.
Bonus: Use charts to better show change over time, and supplement with qualitative context.
As your company grows, additional metrics might become relevant:
- Monthly active users (MAU) to measure engagement
- Margins to gauge the long-term health of your business
- NPS scores
What’s the best way to share bad news?
Your goal is not to impress investors. It’s to build trust and get input. When reporting bad news, provide context, share your learnings, and list out next steps. If your company is considering a pivot or seeing a drop in renewals, treat it as an opportunity to get valuable guidance.
What are appropriate asks?
This will vary based on company and investor, but the bottom line is this: you won’t get what you don’t ask for. Provide context on your request and how it fits into the company’s priorities. Make it specific, actionable, and frictionless.
At Pulley, we’ve leveraged our investors for everything from evaluating a final round candidate to co-authoring a founder FAQ.
How Pulley’s Communications Hub can help
We’re excited to announce the launch of our Communications Hub. Starting today, founders can create and send updates to various stakeholders, including investors, employees, and advisors.
Here’s how we make it easier than ever to stay connected:
- Get started right away - Customize our standard investor update template
- Save valuable time - Store your last update as a template for easy revision
- Track investor engagement - View open rates to see which investors are engaging the most
- Customize your audience - Create custom sender lists, and tailor your messages accordingly
- Select your security level - Require a Pulley log-in, or generate a public link for easy sharing with a broader audience (e.g., prospective investors)
- Receive regular reminders - Receive monthly or quarterly notifications from Pulley to start drafting your next update