Post-investment reporting: what investors should ask for

The cheque clears and the updates slow down. Agree on what you'll receive before you sign, while both sides still want the same thing.

It happens quietly. Month 1 brings a long, cheerful email. Month 4 brings a short one. By month 9 you're reading about your own portfolio company in the business press. Nobody planned it. That's the problem. Nothing in the deal said what you'd get, so the founder sends whatever there's time for. This post gives you both sides of the fix, the schedule you ask for and the deal the founder gets for keeping to it. If you haven't settled the legal rights yet, start with board seats and information rights in India, and with how to evaluate early-stage startups for the checks that come before any of this.

Why do startup updates slow down after you invest?

Updates slow down because the law asks very little and founders are busy. An Indian private company owes you, a minority shareholder, its audited accounts once a year, and the deadlines are generous. Everything more frequent rests on your shareholders' agreement. If that agreement's silent, you're relying on goodwill. Goodwill thins when the news is bad.

Run the clocks in the Companies Act, 2013 to the end and see what you get. The financial year closes on 31 March under section 2(41). Section 96 allows the annual general meeting up to 6 months later, so 30 September. Section 136 says your copy of the accounts must arrive at least 21 days before that meeting. Section 137 gives the company 30 days after the meeting to file the accounts with the Registrar of Companies, and section 92(4) gives it 60 days to file the annual return with the shareholding pattern.

So a company that uses every day it's allowed can send you March's audited numbers in early September. The public record catches up by late October. That's legal. It's also useless for decisions.

You'll want more than that. In a survey of 885 venture capitalists by Gompers, Gornall, Kaplan and Strebulaev, mostly American, respondents reported spending 18 hours of a 55-hour week working with portfolio companies. Indian figures aren't published. Angels aren't VCs either, and you probably don't have 18 hours. But whatever time you do give a company is wasted if you're giving it on numbers from last March.

What should a post-investment reporting schedule include?

Ask for a single page attached to the shareholders' agreement that lists each report, how often it comes, the day it's due and its format. Keep it short enough that a founder can keep to it in a bad month, the one where a big customer pays late, a senior hire walks out and the board pack is due on the same Friday. A schedule nobody can meet is worse than none, because the first miss teaches everyone it doesn't matter.

1. Monthly, by day 10: cash in bank, net burn, months of runway, revenue, collections, headcount, and one line on what went wrong.
2. Quarterly, with the board pack: profit and loss, balance sheet, and variance against the plan the board approved.
3. Yearly, before the board approves it: next year's budget and hiring plan.
4. Yearly, as soon as signed: audited accounts, before the AGM notice goes out.
5. Within days of the event: any allotment, transfer or ESOP grant; litigation; a regulator's notice; a founder or key customer leaving.

Fix the definitions on day one. Is revenue invoiced or collected? Does burn include the founders' salaries, and the GST you'll get back later? Is a customer someone who paid, or someone who signed a pilot? Write each answer into the annex, then don't let it drift. A changed definition in month 7 can make a flat quarter look like growth, and you won't notice unless you wrote down the old one.

What do founders get from agreeing to report?

Founders keep to a schedule when it saves them time. Offer one format that serves every investor on the cap table, a promise that ad hoc requests go through the lead, and a named person who reads each update and replies within the week. Reporting then costs an hour a month instead of a scattered week.

Hand the founder a format rather than a wish. Our investor update email template is written for their side of the table; send it with the term sheet. Then hold up your end. If a founder asks for a customer reference or a hiring lead in the update, answer it, that week. Your silence will turn a monthly update into a quarterly one quicker than any bad month can.

A founder who hears nothing back twice stops asking. Soon after, they stop writing.

How should you read the first three updates?

The first three updates tell you whether the schedule will hold. Watch three signals: whether they arrive on the agreed day, whether the definitions stay fixed, and whether cash and runway appear every time. A founder who drops the cash line in month 3 isn't forgetting. Ask why. Kindly, and the same week, before the gap becomes a habit that both of you quietly accept because raising it later feels awkward.

• Late by a few days: normal. Late by a few weeks, twice: raise it.
• A metric renamed: ask for last month's number on the new basis.
• Runway missing: compute it yourself from cash and burn, then ask.

For what sits under the headline figures, see how to read a startup MIS report. Collections against revenue is where trouble shows first. Keep your own sheet, too: one row per month, the same 6 numbers, copied from each update as it lands. After a year you'll have a row for every month, and you'll see a trend the founder's slides never had to show you.

What should you do before you sign?

Copy the 5-line schedule into your next term sheet as an annex and send the founder the template the same day.

Questions

What should an investor ask for in post-investment reporting?

Ask for a monthly update with cash, burn, revenue, collections and headcount; quarterly financials with variance against plan; the annual budget and audited accounts; and notice of any change to the cap table or any legal event. Agree the format and the deadline for each item before you sign.

How often should startups send investor updates?

Monthly is common at the early stage, because cash moves fast and a quarter is a long time for a young company. Quarterly financials and an annual pack sit on top. The right answer is whatever both sides write down and the founder can keep to every month.

What does the Companies Act require a private company to send shareholders?

Under section 136 of the Companies Act, 2013, members receive the financial statements and auditor's report at least 21 days before the annual general meeting, which section 96 allows up to six months after the financial year closes. More frequent reporting depends on the shareholders' agreement.

What should founders get in return for regular reporting?

A fixed format they fill in once a month instead of one-off questions from every investor, a named person who reads it, and a reply when they ask for help. Reporting works when it costs the founder an hour, not a week.

Sources: Companies Act, 2013 (text as enacted), sections 2(41), 92, 96, 136 and 137, copy hosted by PRS Legislative Research · Gompers, Gornall, Kaplan and Strebulaev, How Do Venture Capitalists Make Decisions?, NBER Working Paper 22587, 2016 (Journal of Financial Economics, 2020)

For more on how startup funding works in India, read the MyStartupValley blog or visit mystartupvalley.com.