If you’ve read my previous posts in the series of The Founders Handbook, Fundraising in the Early Stages, How Much Should I Raise, How Much Equity to Give, then you’ve opened pandora’s box with the list of blog’s available to help you go really deep on the subject of fundraising. These professional investors might even be better writers than they are investors (just kidding) with the effort that they put into their blogs. It’s almost as if they want you to read up on the subject before you go raise money, crazy I know!
Perhaps this is the first time you are reading this, and you missed the recommended blog reading list. No problem, that’s why we have copy/paste right? Here you go!
- http://www.bothsidesofthetable.com/
- http://www.feld.com/
- http://lowercasecapital.com/prospecting/
- http://www.goodreads.com/book/show/11865558-venture-deals
- http://thisweekinstartups.com/
- http://www.startupschool.org/
- http://blog.ycombinator.com/
- https://startupclass.co/
Now that you’ve got your reading list, and spent some time learning the ins and outs of venture capital and professional investors, let’s discuss how to get a meeting with an investor. In the early stages, when cash is running low, and you are looking for someone to understand your brilliance, you’ll take any meeting that has a potential to bring investment. In the beginning just getting someone to take a meeting with you is a big coup, but alas there is a way to do it better.
If reading these blogs I shared teaches you nothing else, it should teach you that most investors want to be introduced to you, not cold called. I’m not saying that it isn’t effective to hit them up without warning, that can work, but let’s do what we can to get a warm intro first.
Intelligence Gathering and Targeting
Now that you have a good idea of what investors are looking for, the different stages of investment and how you fit within the framework, it is time to start building your list of people and ideas. Bust out a spreadsheet (there are more formal tools out there which I use and love, but for now let’s be basic) and on the top row let’s go ahead and make some labels.
- Name (The name of the person you want to talk to)
- Firm (Name of the firm they work at, if you don’t have a name yet, no worries)
- Type of Contact (Intro’s, Investors, Founders etc…)
- Who can refer you (introductions from their network)
- Stage (angel, seed, doesn’t matter)
- Focus (what do they focus on for investments)
- Email (Their email — usually first name @ companyURL)
- Twitter (Twitter handle — also you better start building up your social world)
- Angel List (Their Angel.co handle)
- Contact (You have contacted them by email, phone, coffee, event, tweet etc…)
- Pitched (You’ve pitched them)
- Term Sheet (You’ve received a term sheet)
- Funded (How much they invested in this round)
Start by filling out all your initial contacts, friends, family, potential for referral with as much information about them in the corresponding columns. Once you’ve spent some time reading these blogs, you also probably have a pretty good idea of which investors you would love to have invest in your company, add them. You’ll hopefully have a pretty decent list by now, none the less it’s time push further. Make it your dream list, put people on this list that you think would be great investors, the top of the top.
Once you have this spreadsheet all filled out then it’s time to go hunting! This is going to be laborious, it’ll take some hustling, it’ll take effort, but this is the step that most people don’t take. It’s been said by many people, that in order to be successful, you must do the thing that no one else wants to do. Do the hard things better than everyone else.
This is obviously where you’d first expect to find professional people to network with, and it is. Start at the top of your list of investors that you want to meet and do a search for their name. You are looking for 1st degree connections, you never know, you might get lucky! Next, 2nd Degree and 3rd Degree connections. See who is connected with these investors that you are seeking out and document that in your spreadsheet under the “Who can refer you” section. You will start to notice something as you move through this exercise, a few of your contacts are very well connected. When you recognize who these people are be sure to enter them into your spreadsheet in their own column, and label them as Intro’s (type of contact).
Now that you have discovered who your power connectors are, you need to get on their radar. If you are already pretty good friends with them, then by all means talk to them, maybe you can bypass the whole process. If you are only random acquaintances then it’s time to start doing the work. And by work, I mean getting in front of them, and making their life a whole lot better.
Connectors
Connectors are anyone who can connect you to whoever it is that you need to speak with. The openly offer their entire network to you, with three caveats.
- Be Prepared — Have your 30 second pitch ready. Know what you need to talk to the connected for, (never say “I want to pick your brain”).
- Don’t be arrogant — This should be obvious but, I feel it deserves being stated.
- Pay it Forward — As you build your network over the next few years, remember that you too were a naive n00b looking to take on the world.
Connectors are people who realize the value of 1 + 1 = 3. in the startup world, this is how we move forward, talking to others about our ideas, connecting people with someone who can help them. In a world where the discussion of Colonizing Mars is something that we believe is only a few years away, ideas are the easy part. Execution is the real challenge.
Make it easy for the Connector to connect you to their network.
- Be specific — Know exactly who it is you want them to connect you to and tell them why.
- Give them the intro email — Create a short paragraph/2-sentences about who you are and what you are doing.
- Be genuine — Self explanatory
Here’s an example for a warm email (you can also use LinkedIn if that works better — possibly both) to a connector: — — — — — — — — — — — — — —
Name,
Just read your post about XYZ on Medium (Facebook, LinkedIn, Twitter etc…), I really enjoy reading your stuff.
It’s been a while since we last chatted and I wanted to update you on what I’ve been doing. We are creating the worlds first Time Travel Machine that is Gluten Free! Things are coming along pretty well now, and we are getting ready to start raising our Angel/Seed (depending) round.
You are connected to (This person — also provide a link to their LinkedIn), and she’s very focused on the Time Travel space as an investor, as well they write a lot about it. It would be amazing if you could connect us, she’s mentioned in her writing that warm intro’s work best.
Here is a bit more about me and the project
Name is the founder of GFTTM, they are solving the problem of excess Gluten in Time Travel. They are just raising their Angel/Seed (depending) round and I know how interested in the space you are, you two should definitely talk! Here are the relevant links
Founders Angel ListFounders LInkedInFounders TwitterCompany’s Angel ListCompany’s Website — — — — — — — — — — — — — —
Simply, explain where you are in your journey. Let them know exactly who you’d like to connect with and give them the info that they need to make the intro. This show’s that you value everyone’s time and more importantly, you will represent them (the connector) well.
Rejection is part of the Game
Keep in mind that 10% of your work will eventually pay off as an investment. Here’s the funnel
- Intro email
- Intro to investor
- Meeting with investor
- 1,2,3,4,5 meetings
- investment
It is a long arduous process, but it is how it is done.
Next up, we will cover more about getting introduced to investors. In the meantime, fill out the spreadsheet, become a LinkedIn stalker (find your super connectors) and get those emails out!