Investor Update: 16 key metrics your investors want to see in

monthly updates
yourstory.com/2019/05/16-key-metrics-your-investors-want-to-see-in-month

May 2, 2019

One of the often neglected but critically important pieces of investor relations is committing to
send out regular investor updates.

You have received the much-needed funding for your startup. Now it’s time to take the
product to newer markets, signup more customers, hire for key positions, and scale
operations. The money you just landed will provide some immediate boost, but money alone
won’t be enough to make it as big as you have dreamt of.

You need solid backing from your investors, who can help you with new introductions,
promotion, and advice on various aspects of running a successful business. For this, you
need to engage them, build trust, and strengthen relationships.

One of the often neglected but critically important pieces of investor relations is committing
to send out regular investor updates. Investors love to be in the know.They want to know
about the progress you are making. They want to know what’s happening with their
investment.

This is where tracking and reporting on right metrics comes in play.

One size does not fit all

While monthly investor update is a good frequency, it may be bit too much for a very early
stage startup, which may not have enough to report each month. You will need to decide the
reporting frequency with your investors.

Similarly, the metrics you should report depend on the stage of startup, company size,
revenue, and next funding requirement.

So instead of being prescriptive about the metrics, let’s look at the key metrics (and chart
templates) that most investors want to see in monthly updates.You can agree with your
investors on the most important three–five metrics that they would like to see.

Key Performance Indicators (KPIs) and Metrics

1. Revenue against goal

Absolute revenue number is just a data point. Connect the data points and establish trends
by providing context such as revenue against goal, average revenue (chart 2), percentage
revenue growth (chart 3), revenue against forecast (chart 4), and comparison with previous
period (chart 5).
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Also, provide commentary where necessary.

2. Average revenue
Formula:

Average monthly revenue = [(Revenue in month 1 + month 2 + month 3 + … + month n) /

Number of months]

In this chart template, average monthly revenue is derived from absolute numbers using formulas.

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3. Percentage revenue growth month-over-month
Formula:

% Revenue Growth = [(Revenue in this month - Revenue in previous month) / Revenue in

previous month] x 100

In this chart template;

Percentage growth (positive or negative / increase or decrease) is derived from absolute

numbers using formulas.
Columns with negative growth are automatically highlighted in a different colour.

4. Revenue: actual and forecast

Calculation:

Revenue overachieved or underachieved = actual revenue - forecast revenue.

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In this chart template;

Difference between actual and forecast revenue is derived from absolute values using
formulas, and
The overachieved/underachieved portion is automatically highlighted in different colours.

5. Revenue: This year vs. last year

Comparison of revenue with previous period offers context and shows increase/decrease
over last year.

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6. Percentage revenue from new customers
Formula:

% revenue from new customers = [revenue from new customers/ (revenue from existing
customers + revenue from new customers)] x 100

In this chart template, revenue from new customers is derived from absolute numbers using
formulas.

7. Total revenue and average revenue per user (ARPU)

Calculation:

Average revenue per user = total operating revenue / number of users

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In this template, ARPU values are derived from absolute values.

8. Monthly recurring revenue (MRR)

Calculation:

Net MRR = new MRR + expansion MRR – lost MRR

In other words,

Net MRR = (No. of new customers * average revenue per user per month) + (No. of existing
customers * average revenue per user per month) – (No. of lost customers * average
revenue per user per month)

Non-recurring, one-off charges such as set-up fee should be excluded from MRR calculations.

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9. Monthly recurring revenue (MRR) and annual recurring revenue (ARR)
Calculation:

Net ARR = New ARR + expansion ARR – lost ARR

ARR is used when the term of contract is at least a year or more. Any subscriptions with less
than one-year term should be excluded from ARR.

Similar to MRR, all non-recurring, one-off charges such as set-up fee should be excluded from
ARR calculations.

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10. Gross and net Burn
Gross Burn = Amount of cash a company is spending each month.

Net Burn = Amount of money a company is losing each month.

Net Burn = Gross burn – Revenue

In this template, net burn is derived from gross burn and revenue.

11. Cash on hand and months of runway

Update investors about how much cash you are left with and how many months it will last.
This will give them a clear idea of timelines to kickstart next fund raise, amount of capital
they should keep available and introduce you to other potential investors for the next
funding round.

Calculation:

Months of runway = cash in bank/burn rate

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12. Number of users: actual and forecast

13. Number of users, paying users, and percentage paying users

Formula:

Percentage paying users = (Number of paying users / Total number of users) * 100

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In this template, percentage of paying users is derived from absolute values.

14. New customers acquired

Formula:

% New customers acquired = [No. of new customers / (No. of existing customers + No. of new
customers)] * 100

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In this chart template, percentage new customers value is derived from absolute numbers.

15. Customer Base

Calculation:

Net customers = Existing customer base + renewals + new customers - cancellations

16. Churn rate

Customer churn rate is the percentage of total customers who chose to cancel their
subscriptions during the period.

Formula:

Churn rate = (Number of customers lost / total number of customers) * 100

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Proactive, consistent and professional investor updates is not just an obligation and
responsibility but also an opportunity to show that you are diligent, accountable and
transparent.

Investors prefer visual updates with data-driven charts and minimum text. Charts make it
easy to process and absorb data, spot trends and see the big picture.

In order to save several hours of your time and make things easier for you, we have created
professional, ready-to-use, data-driven chart templates. You can download all these chart
templates, add your data manually or copy data from any source and send out professional
investor updates.

Anand Kulkarni is the founder of AhaPitch.com. AhaPitch

offers a library of professional, ready-to-use, data-driven
chart templates to track KPIs, create business reports, d…

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