The topic of regular and routine investor updates is pretty thoroughly covered out there. This recent Reddit thread covers it and even tools that you can use to write and share them.

I am not going to dig into the format, timing or structure of these things specifically but rather why do them at all, who exactly are they being done for and how they can become an interesting part of your entrepreneurial journey.

As an investor, I do need updates from the companies in the portfolio. I have my own set of accountabilities and reporting that goes out to our fund LPs as well as feed into the quarterly valuation process we use plus the annual audit/review cycle for each of our funds. So yes, I write updates too and use this mindset to do them.

No communication means one of two things – things are so bad you are not doing them or things are so good we either don’t matter anymore or have long since lost any remnant of information rights.

In the case of the latter, preferred shareholders do maintain statutory inspection rights which means I can come to your office, sit in a room and review board minutes, company financials, etc.

The goal is not to play that card (and I have only had to threaten it twice to get information) but to build a strong enough relationship with the founder and founding team that your involvement in the flow of information remains valuable to the company.

Early on, it seems the bar to this is to simply read, process, and reply to the update that a founder spent the time and brainpower to create. I am constantly amazed at how merely doing that sets you apart from most other investors let alone taking action to deliver on an ask.

So back to why do these things at all as a founder.

I learned during my startup founder days that a monthly update early on in the journey is a great way to force personal accountability as well as keep folks in the loop who are important – friends, family members, potential employees, potential investors, journalists/influencers.  Yes, a pretty broad audience so this should not be highly confidential but is an opportunity to provide updates to those who are likely interested in what you are doing. 

Four easy sections – Company, Product, Customers plus an ask or two. Oh, and put the asks at the top rather than waiting to the end which might not get seen.  Be as specific as possible to make it easily actionable even if it is forwarded to someone else.

And on that, make these full of information you’d share at a public presentation. More sensitive information like cash balance, runway, burn rate, forecasted sales pipeline, etc. need to be held to a smaller audience mainly consisting of those on the cap table, especially lead investors and any funds/angels that could be in a position to do follow-on investing in your company. So yes, you will likely do two versions of this thing.

So, again, why bother?  For starters these provide a moment and space for you as a founder to take inventory of what you said you were going to do, what you did and why it did or didn’t go the way you thought. Spoiler alert – it will not go the way you thought it would. That doesn’t mean disaster (usually) just part of the twisted path of entrepreneurship.

So by doing these regularly (likely monthly early on), you make yourself accountable to you. You will also end up creating a well documented history of your founder journey so you will see what you were thinking and doing and different stages of the business. Sort of a hack to generate a history of your adventure.

Beyond the benefits for you, these become documented snapshots of company performance at different intervals which are an important and differentiated add to your data room.

They show potential investors how you think and how you communicate. Essential skills for moving from founder doing it all to CEO leading teams and building a company. So start with monthly then as the company matures move to quarterly and do a report out like a CEO of a public company would do.

Don’t short change yourself on updates and do find the time to do them. Yes, investors like me want and expect them but they are more for you than for me in the long run.