As an angel investor and lawyer I see a good number of investor updates, but I don't see companies sending them frequently enough and they don't usually include some of the most important content should be communicated to the investors.
If you've done things right, you should have investors that provide more than just money. Ideally your investors contribute intros to potential customers, other investors or potential hires, and strategy advice when needed (they should explicitly know what topic you particularly want them to be helpful on!) Other than you and your team, no other group of people want you to succeed more than those that have put cash into your business! So keep them invested in your business, and in you, personally and professionally by keeping them abreast of what's really going on.
A simple e-mail or attachment is fine. I prefer updates not to be bcc'd as I like to see/be reminded of who else is invested. That also allows investors to push each other to weigh in on a topic where their co-investors' expertise may be most needed. People get busy but receiving a few e-mails from other investors saying "Galen, you're the expert here!" is hard to ignore. I also suggest routing the update to your lawyer and accountant: it's an easy way to keep them up to date and they can speak up if they see any issues. Good investor updates should also make board meetings more productive.
Keep it simple. The update should be doable in 60 minutes (investors want you spending your time building the biz!) and generally fit on one page. Don't worry, you'll hear from those that want more detail. Find whatever style works for you but consider starting an email folder titled “Investor Updates" and send notes to yourself throughout the month. Consider the template below and even start next month's update right after you hit send on the current month. Monthly may be too frequent, but I think quarterly is a bit too infrequent.
E-Mail Subject: Startup X August Investor Update
One or two sentences on the state of the biz. Write this section last but place it at the top of the update. You'll better be able to hang a coherent written summary around your metrics, product update, press etc. if you've already assembled the data related sections.
Here is one of the most important sections but also probably the one most commonly left out entirely. This is why you chose your specific investors! If you're not sharing where you're stuck or think you may soon be stuck then you're highly likely to end up stuck indefinitely. Remember, you're a startup - good investors expect you to need help and they want to provide it. Too many investor updates are sunshine and roses. Don't wait to reach out before it's too late. Reread the previous six sentences ten times!
The content of this section may vary based on the state of your biz. Early stage may be more akin to "what we've done/built" while later may be more relevant describing add on features - focusing on metrics/detail (see the next section) that are showing traction. Topics or metrics here include raw information like lines of code written or more general info like new features (current and expected AND actual release date) or an overview of development milestones.
Include both current AND previous month actual and projected figures. This is holding your feet to the fire but that's what makes for success - forcing you to look at what you're doing and adjust or double down as needed.
Metrics vary by business industry but consider the following: user metrics (total users, new users, user acquisition cost, time on site), revenue/loss, partnerships/strategy. Include market standards where relevant. You can show great improvement month to month but it's not relevant if you aren't beating the competition.
Total head count is x. Mention any new hires or losses as well as any open positions.
This one speaks for itself.