A Tried-and-True 6 Step Strategy To Get Investor Intros
If your startup isn’t in an accelerator, coworking space or incubator, or you don’t live in major VC markets like Silicon Valley, Boston, or New York, raising money can be especially challenging. It doesn’t have to be impossible, though. We know -- the hundreds of startups we’ve worked with have an average raise of $220K.
As a startup founder, you already have the skills in place to successfully raise money. You wouldn’t build a company without doing your research, creating a plan, and forging long-term customer relationships. And -- surprise! -- it’s the same for fundraising.
In a recent episode of the Launch Chat podcast, our founder Jake shared a simple 3-step process for founders to get warm investor intros. The process works especially well if you’re raising your first seed funding or series A round.
Here, we’ll elaborate on that process and offer a few additional strategies that will help you connect with investors in a genuine way.
1. Build a strategic founder network.
Fellow startup founders are often the best avenue to get warm investor intros, especially founders who might be one or two steps ahead of you in their startup lifecycle. Make sure to be really strategic as you build your list of entrepreneurial contacts. Search Crunchbase, AngelList, coworking space and accelerator directories, and local startup news outlets for startups in your general industry, who have raised similar amounts of money to what you’re looking for, and ideally who are located within your region. Investors usually focus on specific sectors, geographic markets, and/or dollar amounts, so by finding startups that fit their requirements (or who have recently received their backing) and that are similar to yours, you’re more likely to be a compelling fit.
Listen to Launch Chat to find out which CRM tool we use to aggregate all of this information (and get hundreds of founder email addresses).
2. Do your homework.
Once you build that initial list (aim to have between 60-100 contacts), take your research one step further. See if they’ve gotten any recent press mentions or hit any exciting milestones, who their investors are and how much they’ve raised so far. Check their LinkedIn profile to see if you have any mutual connections or shared interests. Follow them on Twitter to see if their startup is participating in any upcoming pitch competitions or conferences. The same goes for the VC firms or angel investors you might come across while developing your founder list. Make note of their current or recent investments, find out if they’re speaking at any nearby events, and get a solid grasp on the types and stages of companies they typically fund.
3. Get on that email grind.
Now that you’ve done your prep work, it’s time to start reaching out to the founders on your list. This is where the stalking...er, research, comes into play. You’ll be able to add a personal touch to your email rather than just outright asking a stranger for help. Let them know you’re interested in what they’re building (which, hopefully you really are if they’re in your industry), congratulate them on recent milestones, and even see if there are ways you might be able to help them. The first email should be more about building a relationship and creating rapport. Keep it simple and to the point, mention directly what you need help with, and ask if they might have 10 minutes to chat in the near future. Just like you, these entrepreneurs are super busy -- they’ll appreciate that you’ve clearly done your research, but they also don’t want to deal with a ton of back-and-forth just to find out that you want one intro.
4. Be prepared.
If your new startup friend offers to make a few intros on your behalf, you sure as hell shouldn’t expect them to do the heavy lifting. Make the process as easy as possible for them. Consider writing a draft of the email intro, or at the very least, give them a 1-2 sentence elevator pitch and a couple of pertinent stats that they can share with the investor. The same goes for after the initial introduction is made. Have your follow-up to the investor ready to go. Include a polite thank you, a one-page business plan, and a link to your pitch deck showing clear examples of traction.
5. Stay organized.
Organization will make this whole process much more manageable. You may want to consider setting up a CRM system to track who you’ve reached out to, when, and what the outcome was. If you aren’t ready to put software in place, you can even just make a spreadsheet to track your past and pending intros. Set dates to send follow-up emails and include notes on founder and investor milestones so your outreach always feels fresh and personal.
6. Be in it for the long haul.
While there’s definitely research and strategy at play throughout this whole fundraising process, it all really comes down to relationships and networking. And because the first time you ask for intros (and money) probably won’t be the last, you’ll want to think about this as a long-term relationship. A couple of pro moves that we’ve seen? We know entrepreneurs who track founder and investor activity with simple tools like Google Alerts so they can quickly reach out with a congratulatory note whenever new deals are made. We also work with a lot of founders who send monthly updates to their network. These are sent in the form of personal emails (definitely not as e-newsletters) and are a great way to show month-over-month traction. Include KPIs as well as 1-2 ways that your network can help during the upcoming month, whether it’s helping to recruit a new employee or looking for office space. At the end of each email, ask your network to share with any other entrepreneurs, advisors, or investors who might be interested in tracking your progress.
These six steps will make it much easier to get warm introductions to investors -- and, hopefully, to raise a round of funding. At the end of the day, investors want to mitigate risk. By using your startup network (existing angel investors, advisors, founders in your industry) as brand evangelists, you’ll appear pre-vetted and have a better chance at that follow-up call, meeting, or signature on the dotted line.
Looking for investment, but don’t quite have the traction you need to convince investors? Schedule a 15-minute call with our team to find out how we can help you get there.