Si have read anything about pitching your company, you've probably come across advice that says you need a warm pitch to an investor. Without question, a good, friendly introduction, ideally from a founder they've already invested in, is the best way to get on an investor's radar. But if you don't regularly attend barbecues at VC mansions, don't worry: access isn't the only way to raise money.
warm introductions
A “warm introduction” is one made by someone the VC knows well, someone relevant. The venture capitalist may know her children's schoolteacher quite well, for example, but the schoolteacher may not have much investing or start-up experience.
That's a less warm introduction than one made by a founder of a startup the VC invested in. Better than that, even, is a pitch from a founder who has already made the investor a lot of money through a previous exit. There is no need to explain how this works; if the investors are known personally, schedule a short coffee with them. An introduction is not required for that. If you know other successful startup founders, talk to them: They'll introduce you if they believe in your vision.
Unless you've been circulating in the startup ecosystem for a long time, your list of founder friends or investor friends is likely to be quite short. Now, you may have to do a little more work.
The idea of introductions has to do with the network: it works as a filtering system. Any founder will send maybe one or two offers per month to investors; those go to the top of the list, especially if the introduction adds some context about the strength of the connection. "I've worked with them for 15 years at three companies, and I've invested my own money in this angel-stage company" is better than "I met them at a party once."
The problem, of course, is that networks can be opaque. Perhaps an old friend you used to work with at Google is a childhood friend of a well-known venture capitalist? Perhaps his former boss started a company, raised money from someone relevant to his company, and would love to give a presentation?
Extract your connections from LinkedIn
LinkedIn is the perfect tool for doing this type of research. Make a long list of investors you'd like to talk to – time to do some research on LinkedIn.
For investment firms you want to talk to, you can search for the right partner on LinkedIn. Checking on the second degree contacts and sending an email one by one is a good practice. Tell briefly what you are working on and ask: “How strong is your connection to X? Do you know of any other relevant investors in this space? That produces two things; if it's a strong connection, you're prepared to ask for an introduction. If it's a weaker connection, keep looking to see if there's a more reliable way in. And of course, if they know of another investor who hasn't turned up in the research, that's even better!
If you don't have second-degree connections to a particular partner, broaden your search to other partners and investment professionals in the same firm.
You have to work your way through the entire list this way. Yes, this will take a great deal of time, but every second is worth it.
If you're relatively well connected to the startup ecosystem, you'll probably find many connections this way. Ask for appointments. It's okay to send a summary (two or three sentences will do) so you can be sure there are no misunderstandings.
Once connected, the investor will probably ask you to share the presentation. At that point, a quick rejection can be expected; For example, if there is no fit between the investor's investment thesis and your startup. If not immediately declined, the next step is usually a phone call or an in-person meeting. If the presentation is good enough and the investor has a lot of faith in the person presenting, they will often skip the phone and go directly to a presentation meeting.
But what if you can't find so many warm introductions?
cold email
As I mentioned, warm intros are by far the best, but they aren't always possible. Given enough time, the best approach would be to start networking. Get acquainted with the founders of the startups that were found in the research and see if you can get to know them a bit. Asking for advice sometimes works. Offering help might work. Meeting up at networking events can be a great way to build your network and get personal dates.
However, the truth is that sometimes you want to talk to an investor even if you don't have an obvious path to it. If that happens, coming in cold is the only way. A lot of people will say don't do it, and it doesn't always work. However, there is one aspect in favor: investors need a flow of business; they need to evaluate deals and make investments. Business flow can come from almost anywhere, and sometimes through the strangest of channels. Almost every investor I know has, at some point, made an investment that started with a cold incoming email, tweet, or chance meeting at a networking event.
If a cold email must be sent, it is done with the utmost care and attention. All investors receive dozens of cold startup leads a day. High profile investors get hundreds. And the best investors see thousands. Copying and pasting the same introduction to all your emails is not enough. You think of it this way: You're sending out a cold email that, if all goes to plan, could earn your startup hundreds of thousands, if not millions of dollars to continue the journey. You can afford to spend some time adding love, care, and personalization to emails.
A great cold email starts with the context, i.e. why are you emailing them? Start by adding the custom content: Why do you think you are a great investor? “Hello, I am sending you an email because I noticed that you invested in A, B and C, and I noticed that you mentioned your hobby X on Twitter. I'm building something a bit similar to those companies, and I love X too! – that's all it takes. It will stand out just for that little bit of extra research and customization. Now that you have your attention, the next two or three paragraphs sell the highlights of what your company does and why it's a great investment.
If you have traction, a team, and a market, work all three into the opening pitch, but keep the email short—150 to 200 words at the absolute maximum. End the email with a question, and make sure there is only one question in the entire email: “I think my company would be a great fit for Firm X's investment thesis. Would you like to take a closer look at Firm X? the platform?" If they are not interested, they can ignore it. If so, all they have to do is reply, "Sure, I'll take a closer look," and they have a conversation. Make it as easy as possible to open a dialog.
If you don't get a response, think of a way to follow up. Reply to your email a week later, ideally with additional information. “I just wanted to make sure you saw the following, and I wanted to add that we just signed a major contract with Microsoft. I would love to tell you more” is perfect. Adding information is a legitimate reason to contact you again. If the additional information adds value to the proposal, it probably they will reread your original proposal and you will almost certainly get a response if the company she is interested.
