What Do You Tell Investors When Things Aren't Going Well?

It’s easy to send investor updates when revenue is growing and things are going well. It’s a lot harder when revenue is flat, the deals you thought would close didn’t, your cofounder is leaving, or you’re starting to wonder whether what you’re building is working.

Those may be the most important updates you send.

I’m writing this specifically for early-stage founders — particularly pre-seed and seed — where investors bet on you as a person and are often close enough to the business to be genuinely useful.

I’ve been on both sides. As a founder, I know how uncomfortable it can be to tell the people who backed you that things aren’t going according to plan. And as an investor, I also know how frustrating it is to not get updates, or to get an update saying it’s over — without the chance to help.

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Four Reasons to Send the Update Anyway

When things aren’t going well, it’s tempting to wait.

I’ll send the update when this deal closes. I’ll wait until I figure out what we’re doing. Maybe next month the numbers will look better…

And suddenly you haven’t sent an update in three months.

Keep your normal cadence — even if the update is uncomfortable. Here’s why.

1. Your investors might actually be able to help

They may be able to make an introduction, share a pattern they’ve seen elsewhere, help with your next round, or just think through a problem with you. And even if they couldn’t have helped, most would rather have been given the chance.

2. Consistency builds trust

When I took investors’ money as a founder, I felt a responsibility to keep them informed regardless of what was happening. I ask the same of founders I invest in. You build trust by being consistent, in good news and bad. And you earn a ton of respect when you share what isn’t working.

3. Your investors are learning through you

Venture investing means knowing some investments won’t work. If an investor is going to lose money, they at least want the chance to understand why. What did you learn about the customer? The sales motion? Hiring? Product? What worked that another founder could use?

Those lessons make your investors better at their job and better at supporting other founders. When you disappear, you take that value away too.

4. It raises your odds of success

Your update is a mirror, and it holds you accountable. Writing it forces you to say: revenue didn’t grow, customer count stayed the same, the five deals we thought would close didn’t. It’s uncomfortable to write those things down. But holding the mirror up to yourself — or letting your investors hold it up for you — is critical if you want the business to work.

Sometimes an investor will ask the question you’ve been avoiding, or see a pattern that’s harder to recognize when you’re in it every day.

Being transparent isn’t only the right thing to do for your investors. It may be one of the best things you can do for yourself.

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So What Do You Actually Say?

Start with the facts.

Don’t hide the bad number. Don’t replace the KPI you normally report with a new one that looks better. Don’t make your investor read six paragraphs to figure out that revenue didn’t move.

Then add context, your next step, and any asks you have. A simple framework:

Facts → Context/assessment → What you’re doing or don’t know → Ask

For example:

Revenue and customer count were flat this month. Two prospects we expected to close chose a competitor. I’m concerned our competitive positioning isn’t landing late in the sales process. If you’ve sold into a market with an established incumbent, I’d love to talk through our positioning and sales process.

It’s okay to say you don’t know. Naming something that isn’t working — or that you don’t understand — and asking for help gives your investors a real opportunity to be useful.

Our free investor-update skill drafts exactly this structure — TL;DR, metrics, highlights, lowlights, asks, and runway — in your own voice, for the good months and the hard ones.

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10 Rules for Investor Updates When Things Aren’t Going Well

1. Keep the cadence

If you normally send monthly updates, keep sending them monthly.

2. Put the bad news up top

Don’t make investors hunt for it. “Tough month. Revenue was flat and we lost our largest customer. Here’s what happened and what we’re doing.”

3. Keep reporting the same KPIs

If you always report MRR, report MRR when it’s down. Don’t suddenly replace it with “pipeline opportunities.” Don’t change the scoreboard because you’re losing.

4. Separate facts from your assessment

What happened? Why do you think it happened? Be clear about the difference.

5. Tell us what you’re doing next

What are you changing, testing, stopping, or prioritizing as a result?

6. Say “I don’t know” when that’s the case

You don’t need to manufacture an answer because you think your investors expect you to have one.

7. Make specific asks

Not: “Any ideas appreciated!” Instead: “We’re getting ghosted after second sales calls. If you have experience strengthening enterprise sales processes, I’d love to book a meeting next week.”

8. Share what you’re learning

What assumption was wrong? What would you do differently knowing what you know now?

9. If something is material, don’t wait for the next update

Your biggest customer churned. Your cofounder is leaving. Your runway changed materially. You may need to shut down if you can’t raise.

Pick up the phone or send an individual note. Share your calendar. Your investors invested because they want to be involved and support you. There’s nothing to hide.

10. When you really don’t want to write it, send the minimum viable version

• Revenue / customer count: [X]
• Biggest challenge: [X]
• What happened: [X]
• What we’re doing: [X]
• Where I could use help: [X]

Five sentences beats disappearing for three months.

For the broader mechanics and templates I recommend for regular updates, see the Mastering Investor Updates playbook.

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Yes, I’d Back a Founder Who Lost My Money

One founder I invested in has sent an update every month through slow sales growth, cofounder changes, and fundraising challenges.

When something material happened, they didn’t wait for the next update. When their cofounder left, they reached out individually. When they realized they might have to shut down if they couldn’t raise another round, they told us. They shared their calendar in case investors wanted more information, had ideas, or could help.

I’ve also watched them learn some hard lessons along the way: how difficult it is to manage a development team without a technical cofounder, the value that technical counterpart can bring, and one I think is especially important:

Identifying a real customer problem isn’t enough. It has to be one of their most important problems to get their attention, action, and budget.

I would invest in this founder again, even though I lost money on this company. I’ve watched them learn, pivot when things aren’t working, and make hard decisions. They’ve built trust with me throughout the process, and they’ll bring all of that into whatever they build next.

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When the Updates Get Longer, Pay Attention

This is a pattern I’ve learned to watch.

Sometimes, as traction gets less clear, investor updates get longer. There’s more about the market, strategy, product development, exciting conversations, and pipeline — but it gets harder to answer some basic questions: Did revenue grow? Did you add customers? Are customers using the product? How much runway is left?

I invested in one founder who initially sent regular quarterly updates. As traction became less clear, the updates got longer. On the surface, they sounded exciting. In the details, it became increasingly difficult to understand what was actually happening. Then the updates stopped. A few quarters later, I reached out personally and learned the company was running low on cash and trying to raise another round. I only knew because I asked.

Clarity of thought drives clarity of action. Early-stage companies have very limited time and money. Progress requires focused, sometimes painful trade-offs. If you can’t clearly confront what’s happening, it becomes much harder to decide what needs to change.

And it makes me wonder: if you’re avoiding accountability with your investors, are you also avoiding difficult conversations with employees? Your cofounder? Yourself? This says more about how you operate as a founder than it might seem on the surface.

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Think Beyond This Company

There are two types of founders I’m particularly likely to back again:

1. Founders who made me money.
2. Founders who communicated consistently and candidly throughout the journey, even if they lost my money.

Startups fail. Good founders can build companies that don’t work. The outcome of this company isn’t the only thing you’re building — you’re also building your reputation as a founder and your relationships with the people who backed you. The best founder-investor relationships can span multiple companies.

So when things aren’t going well, resist the instinct to put your head down, fix everything, and come back when you have good news. Tell us what’s actually happening. Let us help. And let us hold up the mirror so we can build a world-changing company together.

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Connect with me on LinkedIn or reach out to FoundersEdge for more fundraising guidance.