There are a few things you should keep in mind before you reach out to someone to invest in your company. Most of it, like showing up early to a meeting, is common sense; however, many entrepreneurs routinely make the same mistakes that lead them nowhere with investors. Pitching to angel investors can be incredibly frustrating, especially if you’re doing it wrong. Before you start your crusade for funding, take a look at some of the tips we’ve offered below.
Do your homework.
We’ve mentioned this before, but it bears repeating. Before you send an email, pick up a phone, or try to schedule a meeting with any potential investor, do some research to learn more about them. Taking the time to go collect information about investors helps you determine if your company matches investors’ criteria. It saves your time and the investor’s time as well. There is no point in contacting a biomedical-focused angel group based in New York if you own a retail store in Florida.
EquityNet investor profiles are some of the best places to start your research since they provide you information you need to know including an overview of what types of companies they’re interested in, what stage of revenue they expect, and how much they typically invest. Many investors will also add links to their social media profiles like LinkedIn or Twitter, and some will link to their own websites or companies in their portfolios.
Find as much information as you can. These investors have made content about themselves available for public consumption, so why would you not take the time to look at it? If there is content available that can give you an informational advantage, study it to gain a sense of where investors are coming from and increase your odds of connecting with them.
Search for a mutual connection.
The most effective ways to connect with an investor is to identify a mutual acquaintance that the investor trusts. This may be a friend, family member, colleague, or a connection made through social media. If you understand the relationship between this person and the investor, and it’s apparent that they are on good terms, then there is no harm in asking for an introduction. Doing so helps place you in a position of trust and greatly increases your odds of successfully connecting with an investor.
If you are unable to find a mutual acquaintance, the second best way to connect with an investor is through a cold email. This is an opportunity to personalize your correspondence by making use of the information you researched on the investor. Don’t use a form email to these investors; cater it to that specific investor’s interest. You’re more likely to get a prompt response by doing so.
Most investors stay incredibly busy. When reaching out to them, get to your point quickly without filler. If you’re reaching out to an investor who is only interested in payment processing software, and that’s exactly what your company produces, you don’t need to go into detail about the growth of that market, or any projections of that industry. The investor likely knows a little about the niche market he invests in. Focus on what you intend to do and what type of opportunity you can present to an investor.
When emailing, keep the body of your message to around four sentences. You want an investor to actually read what you’re sending, not just skim over it. Keeping it short will help with that. Also, make everything you send easily searchable so investors can find your correspondence in their inboxes quickly. Include your company name in your topic and any files that you send. Lastly, be able to respond quickly to any replies that you receive.
This is a great video that features David Tisch, Managing Director of the Box Group and Co-Founder of TechStars NYC. Learn the best way to approach investors, send cold-emails like a pro, understand the Do’s & Don’ts of communicating with your existing investors, and other tips for getting VCs and Angels to support your startup.