Mastering early-stage investor reporting.
How to structure your investor reporting.
As a startup founder, you know that your early investors are not just a source of funding but also valuable partners in your entrepreneurial journey. To make the most out of this relationship, treating your investors like any other audience and understanding their needs and perspectives is crucial.
In another article, we examined why investor reporting can actually become one of your superpowers (read more here).
By leveraging your angels and other investors effectively and building mutual trust, you can hook them onto your team in the long run.
This time, we want to show you how you can create effective investor reports that transform your investors into even bigger supporters!
What makes your reporting good?
Treat your investors just like any other audience and understand their needs & perspectives. Your goal is to leverage them and create a mutual trust to hook them on your team.
Your angels probably have only limited time capacity to get a grasp of your current state, because most likely they will have their own entrepreneurial problems on their desks. So use the limited attention span available as best as you can to get to the right outcomes.
What you should do:
Keep it short: Investors have limited time and attention span, so keep your reports concise and to the point.
Show your honest development: Be transparent about your startup's progress, even if there are challenges. Investors value honesty and open communication. Importantly, show your development instead of absolute numbers! Context is everything.
Prioritize and filter: Include only the most crucial information. Filter out unnecessary details to avoid overwhelming your investors. This way they directly get to the core of your message.
Accessible information: Next to specific KPIs, always make sure that everyone can understand your metrics and work with them. There is no meaning in reporting something so specific that none of your investors is able to provide feedback on it.
What should your reporting look like?
1. Short Email + deep dive dashboard:
The foundation of your investor reports lies in a concise email summarizing the main highlights of your startup's performance. However, to provide investors with a deeper understanding, a comprehensive dashboard capturing essential Key Performance Indicators (KPIs) becomes the source of your reporting, which investors can dive into to get a deeper understanding if needed.
💡 Your email should offer a snapshot of the month's achievements, while the dashboard delves into detailed metrics, growth trends, and potential challenges.
2. Use graphs:
We cannot stress this enough: To provide context and a clear understanding of your startup's progress over time, incorporating graphs into your reports is vital. Graphs visually showcase trends, empowering investors to grasp the impact of key decisions and strategies.
💡 Utilizing line graphs can effectively present your growth, stagnation, and decline, offering investors a visual representation of your startup's performance trajectory.
3. Selected metrics only:
While you may be tempted to show your investors all of your metrics, focusing on selected KPIs is the key to effective reporting. It’s in the name: KEY performance indicators. Here it’s important to stay true to your prioritization skills. You should always re-iterate and recap what KPIs really help you to steer your business. Focus on just a few to avoid overwhelming your audience.
💡 If you just closed a round, challenge your KPI selection openly with your investors and collect their feedback on your strategic thoughts.
4. Always include basic financials:
There are some numbers though that you always should report, no matter what your business-specific KPIs are. Most importantly, this includes your cash on hand, burn rate, revenue and runway.
These metrics are universally essential to get the full picture of your situation and understand where your startup is at in terms of the fundraising journey.
5. Clear Asks:
If you want help, make it as actionable as possible. Avoid vague appeals and instead, provide clear guidance on how investors can contribute to your startup's growth.
💡 Rather than expressing a general need for a new Head of Sales, share a link to your LinkedIn post and ask investors to comment, like, and share it within their networks. The same holds true for lead generation or intro targets: Always work with shared Google Sheets or similar to gather their insights in a central way to save everyone’s time and get you to the best outcome.
Some practical tips:
📲 Mobile-friendly Email: Keep in mind that most investors will read your emails on their mobile phones, so ensure the content is easily accessible on smaller screens.
🔒 BCC your investors: BCC your investors when sending reports to maintain privacy and avoid unmoderated group discussions among all of your shareholders.
⏩ Consistent subject with timestamp: Use a consistent Email subject with a timestamp that clearly identifies your startup. This helps investors stay organized in case they search their Emails or save your Email as PDF.
✉️ Attach PDF snapshots for reference: Provide longer reporting versions or dashboards as PDF attachments for easy reference.
How to Structure Your Email:
Last but not least, it’s about your reporting Email and how to write it. Even though there is no right or wrong structure to follow, we like to see the following elements as they enable a good flow and contain everything necessary.
tl;dr: Provide a concise summary of the most important points of your reporting at the beginning.
Highlight + lowlights: Share 2-3 bullet points max to point out notable achievements and challenges over the reporting period.
Sales: Share sales-related KPIs (development), achievements, challenges, and outlook.
Product/Operations: Present KPIs (developments), achievements, challenges, and outlook related to your product or service.
HR, business, partners, culture, etc.: Offer a broader picture of your company's progress and initiatives (e.g. key hires, team events, partner agreements, etc.)
Basic financials: Always display cash on hand, current revenue, burn rate, and runway figures.
Asks: Clearly state how your angels and/or investors can help your startup.
⚠️ The most important factor: Keep it consistent!
Consistency is key when it comes to investor reporting. Regular and reliable communication demonstrates your dedication to your startup's success. If you change the reporting frequency, inform your investors and explain the reasons transparently.
Conclusion
In the world of early-stage software startups, tracking KPIs is essential for both founders and investors. These metrics provide invaluable insights into product-market fit, user engagement, revenue growth, sales efficiency, and capital efficiency.
As founders, embracing KPIs steers businesses in the right direction, while for investors, they are crucial for making informed investment decisions. At JVH Ventures, we prioritize KPIs that showcase progress, sustainability, and growth potential, guiding startups towards a path of success.