I have been investing in startups since 2003, experiencing both big wins and painful losses along the way. Fortunately, the aggregate economics make the continuing effort worthwhile.
I have learned much along the way about assessing teams, ideas and market opportunities. This has improved my win rate over time. However, some things only become apparent post-decision, once the funds have cleared the bank and the companies start spending it.
In my experience, the best predictive indicator of success is rather basic: Investor Updates.
I have found that there are three categories of Investor Updates:
1 - Disciplined: Never more than one page long, and sometimes just a series of bullet points.
These always arrive in a consistent cadence, sometimes monthly but usually quarterly. They focus on what matters most: revenue; cash in the bank; runway; expectations for new capital; KPIs vs Goals for M/Q/Y; highlights; lowlights; what's coming next; and how investors can help.
They are clear, concise and valuable.
They always get read in granular detail, and I try to consider how I can help.
2 - Sprawling: These are always longer and more lush than necessary. They arrive once or twice a year if you are lucky. And they always make me wonder why founders and their teams allocate so much time and effort into investor updates when they should be focused on the underlying business.
When these updates are meant to set the tone for follow-on funding, then OK, great. Otherwise, aren't there better things to focus on?
All I care about are the details in #1 above, so who are you writing this for, and why?
3 - No updates: Nothing. Nada. Silence. This almost always means bad news, and the only question is who you will hear from next - the insolvency lawyers, or embarrassed founders desperate to raise new funds to keep the lights on.
There was one exception for me, where the CEO neglected investor updates for years, and still found a reasonable exit. However, having him tell me to go pound sand when I asked for a trading update was a frustrating experience.
I have found prolonged silence alwayssignals fundamental challenges - whether financial strain, strategic missteps, or team issues. Proactive communication, even with difficult news, builds trust and gives your investors a chance to help.
When founders don't care enough, or aren't organized enough, or are too embarrassed by poor performance, or otherwise too overwhelmed by life and/or business, to proactively send updates to their investors, it's a strong signal of an eventual write-off.
Phrased more nicely: A lack of communication often correlates with operational issues - and can be an early signal of trouble, even if the intent isn't malicious. Unfortunately, we only learn about founders' operational professionalism once they start building - and not necessarily during the fundraising stage.
Angel Investors often do not have information rights, or at least I did not know well enough to ask for them early in my investing career. Now, founder updates and information rights are prerequisites for any funding round in which I participate.
Founders should remember the founder:investor relationship for startups is mutually important, and you should not take it for granted. It's a small world, and you may need funding again in the future.
If you are reading this page, it is probably because I sent the link to you. So, what do you need to know when writing an investor update, at least for me?
Answer the most-important questions:
Remember that your investors backed you and your plan, so let them know if you are on track, where/if/when you are validating your thesis, or where/if/when you are disproving your thesis, and what's going to happen next.
Investor updates are important for building stakeholder confidence, and can make any potential future fundraising easier - particularly from existing investors who you want to continue providing funding.
Structure for good investor updates:
Key point: This does not need to be a big time sink. This should take 1-2 hours max.
Also: Identify investors who can help you with specific challenges you're facing. Send them a more personalised and in-depth email - it's harder to ignore a personalised one-to-one email than a group update. We all want to help, and you can make it easier by being precise and tactical with your asks. If all I need to do is FWD an introduction that you have pre-written, that's easy.
Regular updates don't just inform investors - they help founders track their own journey. Done well, they become a record of value creation, a tool for focus and discipline, and the foundation for future fundraising.
This habit encourages reflection, distills what matters most, and creates alignment across your team and your stakeholders. These updates can also guide 1:1s, BOD meetings, or team meetings, and serve as a first layer of any fundraising data room.
Start sending disciplined investor updates today. Your investors (and future self) will thank you.
/jh on 5 June 2025