You may think that the best way to quickly get investor intros is to bombard everyone you know with your fundraising plans. While that might seem like an effective strategy, it can often backfire and actually hurt you in the long run. In this article, we’ll go over why it's important to strategically choose who you share your plans with and which instances are better than others. We’ll also discuss why it’s smarter to only ask industry specific connections for intros.
Ask Fellow Founders
It can be difficult to find the right investor for your business. But, by leveraging your network and asking fellow founders, you can get warm introductions to the best investors for you.
As a founder, you’re going to need funding at some point in your startup journey. If you’ve been working on your business for some time now, chances are that you’ve already begun looking for potential investors to back it up.
Though there are many ways of getting in touch with investors nowadays, such as through AngelList or Crunchbase, finding the right investors to speak with can still be a challenge. You don’t want to waste time speaking with non-relevant VCs or angel investors just because they happen to appear high on Google search results.
How do you get warm introductions to relevant investors, then? What is the best way of finding the right people to talk to?
You want to leverage your network by asking fellow founders.
Leverage LinkedIn
"Your network is your net worth." The adage is trite but true. If you don't have a strong network, it's going to be a lot harder to raise money for your startup. Investors respond more favorably to entrepreneurs who come highly recommended from trusted sources. That's not an invitation to have your friends and family send emails on your behalf. Rather, it's a call to action to build networks that will provide those introductions.
While building relationships with investors may seem like a daunting task, there are plenty of smart strategies that can help you find the right people to pitch and get in front of them through introductions.
LinkedIn is an essential tool for entrepreneurs and investors alike. It's an excellent way to identify target investors and determine common connections between yourself and them. Once you've identified the right person, check out their profile for information about where they went to school, what companies they've worked at or if any other people in your network have a connection with them.
In many cases, you'll find some sort of link between yourself or someone else in your network and the investor you'd like to meet. The key is finding that connection fast — so turn on LinkedIn notifications and start following VC firms and investing partners that you believe to be most beneficial to your future financial endeavors.
You have to do your research, and I don’t mean just reading the investor’s bio on their website. You need to know what they invest in and what they look for when making an investment. Keep in mind that investors will often say that they want everyone to apply, but there are areas where they are more likely to invest.
For example, if you are pitching an AI platform for farmers, it would make sense to look for VCs who have invested in other agtech companies. If you find a list of those companies and map it back to the investors, you can start building a list of people who might have the most interest.
If you’re pitching a startup focused on the enterprise market, you might be better off targeting VCs and angel investors who have experience with B2B startups.
If you’re not sure where to look for this information, Crunchbase is your friend. You can search for investors by keyword or company and then see who has invested in similar startups to yours before sending your pitch deck over.
Make the Ask
1. Build Relationships With Prospective Investors
The most important thing you can do when fundraising is to get as many prospective investors interested and invested in your company as possible. Once you have a few people that are excited about your company, you can leverage those relationships to warm up further introductions.
2. Get Introductions to the Prospective Investors
To get an introduction from someone that knows the investor, you need to figure out who those people are. If you already have a relationship with the person, it’s easy to ask for an introduction. If not, then you will have to do some research online (LinkedIn, Twitter, etc.). Once you find all of the people that know your prospective investor, it’s time to reach out.
3. Ask For An Introduction
Once you’ve found someone that has a relationship with your prospective investor and is willing to make an introduction, ask them how they would like to do it. Some people prefer email while others prefer LinkedIn or phone calls. Whatever the case may be, follow their lead and try to make it as easy as possible for them.
When making these connections, remember that your first contact does not always have to be an investor. It’s more important to begin networking with prospective contacts and build bridges in the business community. In that way, you’re building up a broader network of industry-relevant partnerships, particularly when it comes to your industry-related target market. That wider network will serve you well down the road, with referral fees and even better warm intros for your next funding round.