The Building Blocks Of Successful Investor Reporting

AUTHOR: Caitlin James

When sitting down to build your next investor update, consider beginning by identifying the thematic areas you plan to address with your audience. Distilling your update into smaller, topic-based segments will make for a more approachable letter with a narrative that sticks. Ideally the structure stays consistent over time. Settle on a template that fits your unique business and style, and keep with that template for each letter. As you build your update, remember that investors will value transparency and candid disclosure, even when the news you have to deliver is less favorable.

‍In this article we’ve included some suggested sections, which may be relevant to you depending on the stage and type of your business. Try mixing and matching the sections below, and any others that are company-specific, to formulate an outline for your updates. Find a structure that flows well for your company, and you may find that constructing future updates comes together more easily and in less time with a template in place.‍

Foundational Sections

‍Several sections are considered to be cornerstones in your investor updates. These sections should be relevant for companies of a wide range of shapes and sizes, and are of critical interest to investors. Start with these sections, and then incorporate your specific sections as desired.

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Introduction

Your introduction welcomes your audience and explicitly conveys the high-level thesis of your update. That thesis might be a nod to recent momentum, or a theme painting happenings and plans across the company. The rest of the update will provide the supporting details, but investors should be able to gather an immediate sense of the main takeaway to come. This section can be read as an executive summary. If written masterfully, an introduction can secure reader attention for the coming content (and investor asks!). In the case of major events (which we saw plenty of in 2020), this section is also an opportunity to reference any macro events and how they may shape the future of your company.‍

Key Asks

Key asks are your opportunity to spotlight the ways in which your investor base can add value. These can include candidate referrals for active job listings, requests for warm introductions to key partners that fit a certain profile, requests for introductions to other prospective investors, or simply solicitations for advice and support on any business challenges. Don’t be afraid to make requests – you never know what help your investors may be able to provide.‍

Core Metrics

Core metrics will vary from company to company, but should generally reflect overall status and traction. Spend some time thinking about which metrics your team should track, and summarize a few key indicators that you can share over time with investors. Be consistent with metrics sharing so that investors can observe emerging trends and track progress.‍

At a minimum, for each reporting period we recommend including:

• Revenues
• Net Income (Loss)
• Cash Balance

‍Additional KPIs decided on a company-by-company basis, for example:

• Customer numbers
• Contract numbers
• Engagement numbers
• Other figures that demonstrate execution‍

Team

A team section can detail updates regarding the team’s evolution and composition. Be sure to mention team size, full time vs. part time commitments, hiring plans, announcements of key/strategic hires, critical job openings, and so on. Remember, investors are not only supporting what you’re building, but the people behind it.‍

Fundraising / Runway

You can expect investors to be particularly interested in the cash reserves of the company and future capital needs. Keep your investors up-to-date on your cash balance and the rate at which you are burning through it. This will help investors get an idea of your runway, aka how long the company can operate without needing more capital infusions. Announce any active or approaching fundraising rounds, as applicable, including detail of how the fundraising will advance business goals. Take this opportunity to articulate your fundraising rationale, as this can serve as a critical marketing platform to appeal to existing investors who may be considering the investment opportunity for themselves and others within their network.‍

Business-Specific Sections

The next series of sections may or may not be relevant to your specific business, depending on industry, stage, type, or other factors. Consider which are most applicable and include several.

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Product / R&D

Share details on key product advancements, including a few screenshots or photos to show features and progress. Talk about major milestones, and be honest about hurdles. Help your audience understand the evolution and development of your product. What’s working? What’s taking longer than expected? What should your audience be excited about that’s coming soon or that recently launched? How can they engage and provide feedback, if desired?‍

Sales & Marketing

Here you can discuss the latest sales and marketing efforts (and key wins), relevant partnership conversations, sales channels and conversion rates, and perhaps where you’re experiencing friction. Explain how much growth you’ve achieved and how you project your traction to evolve going forward.‍

Financial Performance

If enough financial traction exists to demonstrate trending performance, this section can hold some merit with the inclusion of charts, tables, or other figures with high-level commentary. Else, high level financial figures such as “revenue” or “cash balance” can be presented more plainly in a foundational section like Core Metrics.‍

Customer Success

As you build a customer base, this section can cover strategies at play in supporting positive customer experiences and retention. Include information here on churn and any noteworthy customer satisfaction initiatives.‍

Press & PR

If your company has received notable press attention, it can be helpful to include a list of highlights with links to articles. If your company website has a Press page, you can also refer investors there to discover more. If the volume of press mentions is significant enough, it may also make sense to share metrics relating to impressions.‍

Corporate / Legal

A space to announce any changes in corporate structure or status, such as an entity conversion or any restructuring events. You can also detail any necessary legal notices or other advisory which may carry particular tax or other implications for your investors.‍

Operations / Systems

In this section, explore updates regarding key systems and operational processes you are using. This might include the implementation of new technology or software, or the selection of a new manufacturing facility. Explain how these changes will impact the business.

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Hopefully this overview has given you an idea of the building blocks available to you to get started on your own update. Your investors will acknowledge and appreciate the time and attention you commit toward these letters, and you will find dividends returned to your business in unforeseen ways to reward your efforts. If you would like some assistance with settling on the right update template for your business, or a second set of eyes on a draft letter, our team at Clockwork is happy to review it with you. Please reach out to us at contact@clockwork.app and let us know how we can help.