A new report from PR firm Wimbart shows that while investors are asking for more regular updates from their startup companies, 12% of those startups are concerned about keeping their data confidential.
Unlike publicly traded companies, privately held startups aren’t required to report on their performance. However, venture capitalists are eager to stay informed about how their portfolio companies are doing.
According to Wimbart’s survey, in 2023, only 70.8% of investors regularly received updates. That number jumped to 89% in 2024! Additionally, 71% of investors said they would be less likely to invest more money in companies that didn’t provide regular updates.
As funding for African startups has decreased, more founders are reaching out to their investors. Even though many recognize the benefits of regular reporting, only 72% of investors reported that they increased their reporting requirements over the last 18 months. Those who didn’t said they felt confident in the current reporting practices.
Investors who did want more frequent updates cited reasons such as concerns about financial sustainability and the need for greater transparency. Other factors included requests from limited partners, regulatory requirements, and market uncertainty. Research shows that startups that keep their investors updated are three times more likely to secure follow-up funding.
Interestingly, while 93.9% of founders agree that sharing updates is beneficial, only 42.4% believe their investors truly understand their business and market well enough to appreciate those updates. About 39.4% said only some of their investors understood, while 18.2% felt that none of their investors did.
Even though 60% of founders have received help from investors due to updates they shared, some are still hesitant. Investors mentioned that they often don’t have a complete view of their portfolio companies, which limits their ability to provide support. A few reasons for this include:
- 27.8% said the reports from startups lacked focus.
- 22.2% worried they might come across as too pushy.
- 16.7% pointed to a lack of accountability from founders.
Interestingly, a small number of investors said they didn’t provide feedback simply because it took too much time and effort.
Changing priorities
There’s a gap between what investors expect and what founders are willing to share. In 2023, financial reporting was the most critical metric for investors, but in 2024, it’s now seen as second to sustainability. Other key metrics that investors find valuable include operational goals and future objectives.
On the flip side, founders want to focus on operational metrics like customer acquisition costs and churn rates. The report suggests that aligning reporting frameworks could be essential. Standardized templates and a mutual understanding between founders and investors could help make the reporting process smoother and ensure everyone is on the same page.
