Toby Egbuna
June 5th, 2024

Hello! Welcome to my newsletter - Finessing Funding💰. Every other week, I’ll be sharing stories, strategies, and ideas about funding for your startup. Get Finessing funding delivered to your inbox every week 👇🏾

In April, I hosted a workshop on raising venture capital for the current cohort of the Headstream Accelerator.

Yesterday, I hosted a second workshop (this time over Zoom) about writing good investor updates. Though I talked a bit about this in CREAM, I wanted to do a more thorough deep dive in this week’s newsletter.

What is an investor update?

An investor update is a regularly sent report that founders send to investors, advisors, employees, and anyone else in their networks. It highlights wins and challenges from the previous month, details goals for the upcoming months, and lists the team's requests for its supporters.

Why investor updates are important

There are two types of founders:

1. Founders who send investor updates

2. Founders who don’t

I am 100% convinced of this. The best founders send consistent (ideally monthly, but quarterly at the least) updates to their community of investors, advisors, and supporters.

There are three primary reasons for this:

Building accountability

Every month, you will tell your supporters what you accomplished over the previous 30 days and what you prioritized for the next 30 days. Writing investor updates forces founders to be accountable for the things that they say they will get done.

You might draft your update with a plan to sign 4 new customers this month, but when you review it, you might dial it back to 3 customers because you’re not confident about signing that fourth customer.

While you won’t be penalized for missing milestones mentioned in your updates, you, as a founder, will want to reach the goals you discuss.

Aligning your team on priorities

Your investor update should be collaborative. You’ll want to invite team members from product, engineering, sales, marketing, and any other workstream to update the report's content. This will promote the same sense of accountability mentioned above across your team.

Establishing trust with investors

Well, it is an investor update, isn’t it?

Investors have a tough job. They get 3 to 4 calls with you and some asynchronous due diligence to decide whether to invest in your company. For this reason, they decline way more opportunities than they accept.

Your investor update can be a way to keep prospective investors in the loop. After 6-12 months of receiving and reading your updates, the investor will be much more familiar with you as a founder and your business, which means she’ll have more conviction about an investment decision.

What to include in your investor update

But, in the spirit of transparency, here’s a real investor update that I sent in June 2023:

Here’s an excerpt from the CREAM E-book of what I suggest you include:

1. KPIs - updates on our revenue numbers, # of customers, and a 1 KPI per workstream (sales/product/marketing)

2. Business update - a 200-word summary of what’s happened in the last 30 days. This is the meat of the update. I typically share recent learning for one of our workstreams and any new customers we’ve signed. This is where you give investors a real peek behind the blinds.

3. Highlights - good news from the past 30 days. I usually use this to share

4. Challenges - optional, but important if you have anything for #6 below. I include things we’re struggling with and/or areas we could help.

5. Focuses for the next month - a bulleted list of focuses for the next 30 days for each workstream. One sentence per workstream. This is where you’d collaborate with your team and let them identify priorities.

6. Asks - this is where I tap into our community to ask for help with anything. Last year, I asked for connections to UI/UX researchers because I want to be better about customer interviews, and I got 3 intros!

7. Thanks - give flowers! I use this section to shout out anyone in our network who’s made intros for us, referred us to a potential customer, or helped us in another way.

Creating a process

Writing an investor shouldn’t be hard, but it will be if you don’t have a process. Here’s how I craft mine every month:

1. Draft it (early) - I try to give myself at least 3 days before the end of the month to draft my update. This gives me enough time to write everything down and take 1-2 days to step away before returning for step 2.

2. Edit and collaborate - After drafting the update, I tag my team members to update the month's focus for their workstreams. This is also when I proofread what I wrote in step 1 to check for brevity and typos.

3. Schedule the email - At first, I used yamm.com to send my updates, but I switched to Beehiiv since it’s built for newsletters like this and gives me a bit more reporting functionality to see who opened the email. I always schedule my updates to go out on the first business day of the month at 6 p.m. EST.

   Note: I also use Beehiiv for this newsletter. If you want to sign up, use my referral link: https://www.beehiiv.com?via=TobyEgbuna1 🤝🏾

Your process for creating investor updates might not be the same as mine, and that’s okay. All that matters is that you have a process. Do it the same way every month.

Additional considerations

I mentioned a few tips in the CREAM E-book, but now that I’ve sat on it a bit more, here are some more things to keep in mind:

• Never leave the "Asks" section empty - Make sure to include specific things you need from your investors and leverage your Challenges in your asks. If you’re having a hard time filling an open Front-End Engineer role, ask for introductions to engineers in this section.

• Focus the "Business Update" on one priority - Choose the most important update and go in-depth, saving other news for the "Highlights" section. Otherwise, your update will turn into an essay.

• Use visual aids effectively - Include relevant charts, graphs, or imagery to illustrate your key points and metrics better. I always include an ARR chart, but I also like to share pictures of our team at off-sites or customer testimonials when I have them.

• Keep it casual - Talk to investors like you'd talk to your friends. Don’t use big words; don’t be afraid to put a personal touch in there. Let your community get to know you.

I’ll die on this hill: good founders send monthly investor updates. Take 90 minutes monthly to build credibility and accountability for your entire team. You won’t regret it.

Funding opportunities closing this week

1. Factor Fellowship - The Factor Fellowship is a 16-week part-time fellowship hosted on evenings and weekends. Programming is created by top NYC startup leaders and VCs. Upon completing the program, you’ll be connected to a full-time role within a NYC high-growth startup.

   Apply here: https://www.factornyc.org/apply

2. HBCU Founders Accelerator - The HBCU Founders Accelerator is a customized 16-week intensive program, primarily conducted virtually. It commences with goal-setting discussions, developing a work plan, and identifying key performance indicators (KPIs) to track progress. Each portfolio company is provided with dedicated executive-level support from paid advisors throughout the program. With a cohort size of 8-10 startups, our accelerator seeks to create a collaborative environment to foster entrepreneurial success. We make an initial investment of $120,000 in each selected startup to help support their growth.

   Apply here: https://www.nex3.com/hbcu-founders-accelerator