Sending an investor update is a great way to connect with your investors to drive engagement as you work to build confidence and trust in your abilities as a fund manager.
If you are new to writing investor updates, it may be helpful to start with a template. Then, you can add information as you see fit, and an outline will help you stay focused as you craft your update.
What To Include With Your Investor Update
When investors read your updates, they expect to understand the investment's overall trajectory.
From our experience, these are the essential 4 elements to include:
1. Highlights and Key Takeaways
Start with the highlights of your update.
That way your investors can scan the first few sentences to get a feel for how things are going.
And while your investor updates are important, it’s critical to remember everyone is busy.
Your investors are likely reading your update on their phone or a small screen like a tablet, so keep your sentences short.
Paragraphs should be two to three sentences.
You may prefer to start your update with three to five main takeaways.
Use bullet points and highlight important figures and metrics in bold to help your readers process the information quickly.
Resist the urge to bury the lead. If you have big news, include it in the first two sentences then offer details later in your update.
You’re likely doing this already but put any information you provide into context for your investors. They trust your judgment, so provide some background information about the companies included in the portfolio to support your choices to reinforce their decision to trust you with their capital.
2. Key Metrics
Key metrics are an easy way to share progress over time.
If possible, choose a single key performance indicator (KPI) and use it in each of your investor updates to show how your fund performs over time.
Provide quarterly and annual summaries to show a pattern of success.
Be sure to provide context to help explain metric movements, as well.
For example, include the following for individual companies inside the portfolio:
- Product data
- Sales velocity
If an investment isn't performing as expected, share any information you have to help investors understand what's going on. As always, ask the company’s founder for permission.
Asking investors for help can be uncomfortable. But it's crucial to allow investors to provide connections by being honest about areas where you could use help.
For example, maybe you need to hire an experienced assistant or would like to get introductions that could help you diversify into another sector.
Whether you need a new accountant or just want to remain engaged with your investors by offering them the opportunity to help, the "ask" portion of your investor update is crucial as you work to grow your relationships with investors.
Before you send an investor update, reach out to the founders of the companies in your portfolio and ask if they have any information they'd like you to share with your investors.
They may have contributions that you could use in other sections of your update, as well.
Share portfolio updates like:
- links to company blog posts,
- new product releases,
- and articles about companies in the portfolio.
When to Send Investor Updates
Depending on your investors' preferences, the amount of activity and news you'd like to share, and your personal preferences, you may choose to send investor updates daily, weekly, monthly, or quarterly.
In general, if you prefer to send frequent updates, it's important to keep them short and to the point.
Frequent investor updates will help keep your fund top-of-mind, but if they are too lengthy, the information can become cumbersome for your investors.
Instead, the contents of your updates should be engaging and data-driven while calling out the positives to help your investors see that you are working hard to earn their trust.
Tools To Help Write An Investor Update
There are numerous templates available online to help you write an effective investor update.
Once you've worked with a template and feel that it meets your needs, save a blank copy to make creating new investor updates simple.
But the best platform we’ve come across is Visible.
Visible.vc: At Allocations, we use Visible because of its simplicity and built-in lightweight CRM.
Allocations CEO, Kingsley Advani sat down with Mike Pruss, CEO of Visible to discuss how Allocations utilizes Visible. Listen here: Visible Webinar
Great Updates Lead To More Investment Capital
Fund managers who choose to send updates quarterly (or more often) understand that this small amount of effort helps build a network of investors that are excited to work with them in the future.
In addition, high-quality updates that are easy to read and contain the information that investors want helps foster a loyal network of investors.
We believe in the power of transparency and technology to build meaningful relationships between investors and fund managers.
That’s why we’re so proud of what we’re building at Allocations: easy to use, powerful, digital tools for fund managers and investors.
Disclaimer: The information provided in this document does not, and is not intended to, constitute legal, tax, investment, or accounting advice; instead, all information, content, and materials available are for general informational or educational purposes only and it represents the personal view of the author. Please consult with your own legal, accounting or tax professionals.