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november 20, 2022 by NICK SORICH
7 deadly sins to avoid in Investor updates
Hey everyone,

This article reviews the investor update generated by the OpenAI generative network in their Playground. We simulated the update with the following prompt:

"Write an investor update that was sent by the founders of the LayerCI company to their investor"

That's the result we got. We used a separate prompt for headline generation: Come up with an email headline for an investor update.
Let's see what common mistakes are made by OpenAI.

1. Be clear and noticeable with your headline

"Good News! Your Investment is Doing Well" - The AI started with "Good news!", that's a good way to get the investor's attention, but there is no company name. Investors have dozens of companies in their portfolios and thousands of potential companies that send emails daily.

We would recommend the following:

"???? Good News from the LayerCI [September 2022]. Your Investment is Doing Well"

2. Personalize your email to the investor

Those kinds of intros look spammy. We all like our names, so it's important to respect your investors and personalize updates at least according to their group: potential investor, partner, etc. Additionally, you want to add your name and the company's name (optional: add tagline as well) – investors receive hundreds of updates like that, so it's a good idea to put a little reminder here.

We recommend the following:

"Hey [First_Name],

John from LayerCI here – a legal tech SaaS that helps founders apply for trademarks"
3. Use highlights to help save investor's time

When an investor received your email, your project was most likely not their top priority. By providing summaries in several lines of text, you help your investor save a huge amount of time. That means you respect their time.

In Highlights you provide a high-level overview of your company's recent wins (or losses), financial health and other key points of interest.

4. Use sections to make your message clear.
Investor updates usually contain several sections. You can use the following ones: Highlights, Key Metrics, Product Updates, Shout-outs, and Asks. The following paragraphs describe some of them in more detail.

5. Do not ignore Asks section
Your investor is your main ally, ready to help you whenever you need it. They will always be on your side because the success of your business directly affects them financially. Never hesitate to ask for assistance, BUT set your requests as precisely as possible! They have many useful connections and can introduce you to important people in the business world. They are not going through the whole startup growth process for the first time; they know what they're doing!
6. Add Metrics

Highlight the important KPIs to show your company's growth (or identify areas for improvement). How long will it take you to reach the next growth milestone?

Some metrics to include in the investor update:

Monthly Growth in terms of Sales–Highlight the key sales made this month. How much has your team grown since last month? Maybe, you made some high-profile sales to new clients?

Revenue (add MoM growth, typically in %). Actual and forecast. Your business can't survive without bringing in money. How much revenue is your business generating this month? What new customers have you brought in? What's your profit margin?

Cash, Burn, Runway—Although investors may be interested in your company's revenue, they are primarily concerned with how their capital is being used and how long it will last.

Use a line chart to show your burn rate and cash on hand.

It helps prepare to start a new round of funding beforehand and not unexpectedly run out of money one day.

Margins–When preparing for an investment round, it's important to understand the profitability of your company. Be sure to include Gross Profit and Acquisition Costs as well as operating expenses.
7. Visualize your metrics

For too long, organizations have been focusing on the data itself. Data is, of course, an important tool for making business decisions. However, there's a more efficient way to use it, especially when you tell a story based on that data. Stories help you connect the dots and visualize the bigger picture. Also, it helps investors instantly understand the main takeaways from the chart they're looking at.

We've outlined the seven deadly sins in an investor update. Avoid them, and you'll be well on your way to successful fundraising. Don't forget that efficient communication with investors is a process, not an one-time event.
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