There is no need to reinvent the wheel or investor update structure when you can simply use a template from one of the world's top VC experts, right?
Many of these experts work in Y Combinator. Y Combinator is a widely known startup accelerator that had a hand in launching companies with big names like Airbnb, DoorDash, Dropbox, Instacart, and many others. Their investor update template was created a few years ago but is still one of the most popular on-demand on Google and, according to the review, one of the most intuitive to use. Whether this is true, we decided to see for ourselves.
To start with, we need to show you what the Y Combinator template looks like:
Hey all, It's been an awesome, but intense, [summer/fall/winter/spring]. Many things are tracking well, but there are some challenges we could use your help with (more below).
As always, I've included charts for our revenue growth, cash on hand, and burn rate.
Revenue with Change %: X$, Y% MoM Cash on Hand: X$ Burn Rate: X$
How You Can Help
We have some problems with [Product Initiative]. We are lacking experience in [X]. Can you recommend a [Mentor/Partner/etc.] to come in and help (this can be a paid coaching position)?
I have been approached by a VC who wants to potentially pre-empt a [Series X]. How do I best deal with this?
We have lost 2 important [customers/potential customers] due to [X]. Can any of you spare some time to talk through our positioning statements and sales process?
I am worried that [key competitor X] has just closed a [$X Round] (see here for more info), how shall we best deal with this (if at all)?
A quick qualitative recap of how your month went. Be as quick and to the point as possible here. The point is to have your investors read the entire update and offer help.
In our opinion, this is one of the best examples of what an investor update can look like, especially if you offer it for use by beginners. However, some things could be improved. But first things first.
Starting with the main advantage of this template is, as you may have noticed, its brevity. There is really no superfluous information here-only the most basic KPIs, the problems that have arisen and ways to solve them, and a brief summary of the results of this period.
On the one hand, it helps investors quickly assess the situation and the changes within the business and accept or reject the proposed solutions to problems. But on the other hand, a brief description of the previous period seems to be missing here. After all, problems never arise from nowhere, and it would be logical to link them and indicate why they appeared right now. Maybe a failed advertising campaign in the previous month resulted in a decreased number of active users of your service already this month.
Speaking of numbers, the number of metrics needed to be included in the update may seem like a relief for just beginners to write updates – only three!
But in reality, this option is not ideal for investors who want to see the whole picture. One of the options is to expand the number of included metrics to 7-10 (see our article, which metrics must be included in the update).
Or another option-you can fit all the metrics relevant for this period (growth/decline) of the business in the How You Can Help part. It is not just to say that we have lost two important customers, but to express it as a percentage – this is 4% of the total number of Active Users of your product or service.
Overall, this is a nice framework for an update. It will help you not to start from scratch (something that beginners are so afraid of). Our final recommendation will be to modify it in accordance with the current financial situation within the business to provide all the necessary information to investors without further questions and clarifications.
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