How To Write Investor Updates
In 2019, I started helping the founders of games companies. Founders often spend an enormous amount of time raising money, and optimizing who is involved in a financing round. However, too few founders tap into their investors sufficiently. One fundamental way to keep possible investors and existing investors involved and excited about the company is to send out a monthly update.
It’s been a common practice for Silicon Valley startups to write monthly update emails to their potential and existing investors. What is vital in an update is to show progress. The update needs to cover the actions that the company has taken. Then it needs to discuss how these actions have guided the company forward.
Here’s a template that I put together, and if you read on, I’ll explain why things matter in this template. To grab the template, use this form:
When you still don’t have KPIs to share with investors, you can share other traction items under the product update. You can talk about UA tests and share those numbers, you can talk about how the investor can get the game from TestFlight with the shared URL, or how you’ve made progress towards the game going into soft launch in X days, weeks, or months.
The template has a product update area, where you can highlight briefly the progress that you’ve made since the last update.
Once you have KPIs, you need to start with them. Include highlight soft launch and hard launch metrics from the games and the trends, basically the change from any previous update you’ve done. If you ever reach the fortunate situation of having several games out in soft launch, it makes sense to pick a few with the most potential to follow in the monthly updates. You shouldn’t have more than three.
When highlighting the KPIs for a game, you should focus on one critical metric per engagement, revenue, and marketing. The idea is to be concise. Stop sharing metrics on the investor updates that are on an adequate level, and focus on the ones that you’re now working on to improve.
When you start talking about numbers, it’s essential to talk about the targets for the metrics you have, and then communicate the numbers as you are working towards the targets.
Depending on the stage of your game, you want to highlight the right KPIs.
- First soft launch Are you tracking session length and session count? You should discuss these in your email, especially for Day-0.
- First build update to soft launch If you are already at the stage where Retention Day-1 matters, you can start tracking that and include it into your investor update. If you Day-1 starts to level at a certain number, you can mention in your update that Day-1 is now stable. If you see otherwise, work on the problem to find a stable and reliable Day-1. The idea is to drop Day-1 from the update, once you’re not focusing on it anymore.
- Other early soft launch updates Once your game has a proper Day-1, the focus should shift towards Day-3 metrics. You can then start reporting the Day-3 to Day-1 ratio. This metric indicates the slope of the churn and gives predictions on how people are becoming more addicted to your game.
- Later stages Once you’ve cleared Day-1 and Day-3, you start to look at Day-7, 30, 60, 90, 120, and onwards. If you are in a game genre where you’d want players sticking around for years, it’s essential to cover the improvements in your investor update.
Disclaimer: lots of people might ask the question of what is a proper Day-1. It depends on the gaming genre you are approaching. In most cases, you should aim to have it above 45%. But there can be more nice products, where the initial churn is much higher, but then the churn flattens, and you still achieve a D3/D1 ratio of 0.7 or higher.
Why not DAU, which is short for daily active users? How I see it, the DAU metric is the latest metric to be added to the list of vanity metrics. These are metrics that don’t signal performance, like MAU, new installs, total installs ever, etc. DAU can be categorized as a vanity metric, as it doesn’t tell you if you’re doing well or not.
You might have a million DAU, which is phenomenal, but if none of them are paying and 90% churn after their first day of playing, you might not have a business. This is why indicating metrics like D3 / D1 ratio are more interesting.
In every games business, you want to get a healthy long term business. That’s why retention is the golden metric. Games with excellent retention tend to be more durable, and tend to be able to stack DAU more effectively. If you have that, you have a lot of shots on goal to optimize revenue and monetization for years.
That’s why every game developer should first focus on their retention metrics. The other reason is that retention is quite elusive with games. The more feature, bells, and whistles you pile onto the game, the harder it will become to improve retention. You don’t know which knob to turn to increase retention, so the less knobs you have, the better off you will be.
Once you are confident with your engagement metrics, you can start looking into monetization. You might have a combination of ads and IAP, or one or the other.
- Ad monetization At the early stages, when you are adding interstitials, banners and video ads into the game, how are ad views correlating with your session lengths? When you are satisfied with the numbers, you can move on to start improving your Ad revenue per player.
- In-app purchases How many daily active customers (DAC) do you have? What is your ARPPU?
- Predicted LTV What is your player’s life-time value (LTV)? You need to model out the number quite early in the soft launch. What does the ARPU Day-7 look like? Day-30?
Here it makes sense to cover your performance marketing numbers.
- Cost-per-install The CPI numbers are critical and will show if you are hitting the right kind of numbers for your game genre.
- Reaching an audience with UA Besides the cost, it’s good to cover any findings and issues on reaching an audience. You want to have the ability to scale your user acquisition activity profitably.
- Organic installs How is the k-factor shaping up, especially your user acquisitions, are scaling?
Besides KPIs, what else should be included
You need to write out a business update on the highlights that have happened outside of the KPIs — focusing on talking about real things that have come true. I wouldn’t include prospects at all if they can still swing both ways. Focus on mentioning things like 1–2 key hires, team size, and team growth rate. E.g., “We are now 22 people (added five this month) including our new head of finance, ….”
You can frame the business update this way:
- The good What went well this month? Could be a bulleted list of 2–5 items.
- The bad What went poorly this month? Could be a bulleted list of 2–5 items.
- Asks for help What do you need help with? List up to 3 items people can help you with. This should always go at the top of the email, as people might not read the rest in detail.
- Current cash position and burn rate When you have investors on board, you need to start communicating how many months of runway you have left
How often should it go out
I’d recommend a monthly cadence, where you distill all the progress you made during the month.
And make sure that the update goes out regularly, at the same time of the month. That will instill more confidence in your efforts, and that you’re on top of things.
What is a right format for the update
Make sure to ask the investor for permission to add then on your investor update mailing list. If they say yes, the read is that they are interested in hearing more.
I would suggest that you’d do the update with plain text. It’s the easiest to read on any device.
To grab the template, fill out this form.
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