Investors only consider funding startups that they resonate with. During entrepreneurs’ pitches, their main focus is the business model and market potential. However, once a venture capitalist decides to invest in a startup, their focus shifts toward the investor reports.
These reports give the venture capitalist an update on the progress of the startup. As an entrepreneur, you can provide your investors with reports monthly, quarterly or yearly. To keep your investors happy, you need to include the details that they want in your investor reports. In this post, you will learn the top details every startup should report to investors.
Firstly, every startup should report their financial plans to investors. Investors want to know what their funding is being used for and what milestones the capital will help the company achieve. After all, as former Angellist partner Lee Jacobs points out, “the capital going into the business should meaningfully increase the value of the business by derisking various parts of the company.” Keep your financial plans short and to the point in your investor reports.
Provide them with the most significant metrics that directly impact both them as investors and the startup’s success. Then, work your plans into a timeline to create an easy-to-read explanation. If your plans change in between reports, document these changes for your investors. Then, you will keep your investors happy with your investor report details.
Another detail to include in your investor reports is employee updates. As startups mature, teams often expand. Investors prefer to remain in the loop during hiring because it affects startups’ financial situations. If you quickly transition from a 5-people team into a 20-people team, your finances alter drastically. You then need to begin paying 15 more people.
If you function on unsteady cash flow, this increase in payments can poorly affect the best way to run a tech startup. Experienced investors can assist you in determining when the right time is to scale up. Therefore, every startup should report employee updates to investors to gain beneficial advice.
Investors also deserve to obtain website traffic details from startups regularly. After all, a website traffic boost often indicates an increase in sales. More so, it provides insight into how well a startup’s marketing strategies are performing. Website traffic statistics allow investors to understand how many consumers view your products on a daily basis.
If your traffic is rising and your sales are not, you and your investor can both realize that your site needs some work. They may instruct you to improve your SEO or change web hosting platforms. Either way, investors deserve to know how much traffic your website is receiving. For this reason, every startup should report it to investors.
New Marketing Strategies
Every startup should also supply investors with new marketing strategies in each report. When you attracted an investor to fund your startup, you likely explained the marketing tactics you planned to implement. Most investors do not take this detail lightly because marketing strategies directly impact sales, which can avoid a failed startup.
If you drift away from the marketing strategies that your investor favored at the beginning of your startup process, you could create conflict between you and your monetary provider. To avoid arguments, explain new marketing strategy ideas in your investor reports prior to implementing them.
Additionally, startups should report growth opportunities to investors as well. In doing so, you will keep venture capitalists invested in your brand throughout your startup process. Use the other elements of your reports to determine your opportunities for growth.
Consider your financial situation and where you plan to be financially in two months. If you forecast that your profits will increase steadily, you can present new marketing strategies to your investors. While the strategies may be more costly, they could bring in more customers and, therefore, boost sales further. Explain all of the expansion opportunities your startup is gaining to keep your investors intrigued.
For entrepreneurs to keep investors informed, they need to provide them with certain components in each investor report they supply. To guarantee their satisfaction, offer financial information that includes plans for future endeavors.
Keep investors up-to-date on employee count to give them an idea of how much of your profit goes toward paychecks. Supply website traffic statistics to show how many viewers convert into customers. When you come up with new marketing strategies, explain them to your investors as well. Finally, continuously remind your investors of the growth opportunities your startup has. If you include these details every startup should report to investors in your report, you will keep your VC’s satisfied.