If you’re looking for startup investment, the first thing you’ll need to do is build up a solid network of investors to reach out to. The cold, hard truth is this isn’t a quick and easy process. But then again, by now you should realise that the startup game isn’t just a walk in the park.
You’ll spend a long time assembling a substantial investor network who could potentially fund your startup idea. But when you reap the rewards it’ll be worth it.
Here are our top tips on how to connect with investors.
What do startup investors want?
Before you dive headlong into contacting investors, take a step back and ask yourself what it is an investor is looking for. The bottom line is every investor is looking to make a quick buck. They’re interested in how they can utilise your startup idea to earn cold hard cash. Show them how your startup is on the path to liquidity (that’s the bit where your investor will get a return on their money).
Your investor will be looking for certain criteria in you and your startup:
- How big is the market you’re going into? It needs to be large enough to make a lot of money.
- Can your idea scale, and scale quickly?
- Do you have a competitive advantage?
- Can you and your team make the idea a success?
If your startup meets these criteria, you’re ready to think about reaching out to investors.
Who’s best for you?
The investment market is a fragmented place. There are VCs, angel investors, micro-VCs, super-angels … you need to work out which people are the best to target for your startup, whatever stage it may be at.
Not only that, you should look at connecting with investors who have some expertise in your area. Firstly, they’ll be a tremendous asset to your startup. Secondly, they’ll be much more likely to invest in an area they’ve been proven in before.
If you’re smart, you’ll have started an investor network long before you’re ready to seek investment. In general, investors don’t like being asked for money from entrepreneurs they don’t know. They’re much more likely to invest in a startup and entrepreneur that they have an existing relationship with. So, seek out investors early and start building relationships.
Put your sales hat on
Building a network of investors to connect with is all about generating leads and closing business, much like a traditional sales pipeline. Generate leads. Organise and prioritise leads. Work your sales process. Then close business.
Ask everyone you know
Often, the first step entrepreneurs make when they want to connect with investors is to ask everyone they know for connections. It’s the easiest way to start building your network. Reach out to family and friends or anyone you know that’s had investment. You never know who they might know.
Another group you can target for their connections are professionals. Lawyers, accountants, bankers – these people will move in the same circles as investors, so see if they can connect you with some.
Find someone specific to you
Asking everyone you know is a definite line of enquiry, but make sure you don’t leave it there. Sure, it’s a good way to get warm leads, but are the investors your peers and co-workers know right for your startup?
As we mentioned earlier, it’s probably much more lucrative to target investors who have experience in your industry. Try researching investors who have recently invested in your field or spaces close to yours. Keep up to date with your industry news for the latest developments.
Who’s in the know?
Use your existing contacts to see if anyone you know is already connected to investors who could be useful to you. Use LinkedIn, Twitter, Facebook, AngelList etc, and see if any of your friends could make an introduction happen.
Do your homework
Stop! Before you even think about reaching out to your list of investor leads, you should research each investor individually. Learn as much as you can about them. What’s their background? What have they previously invested in? How do they like to be approached? How much do they typically invest? Will they share your vision?
That way you can tailor each contact you make, and even if it’s a cold lead, it will seem a lot more personal.
Refine your list
Now you’ve got a list of potential investor leads, start to organise them. If you’ve researched your investors using the questions above, you’ll be able to prioritise who to contact first.
Sort them into warm and cold leads. Start with warm leads as they will be easier to convince, and once you have one investor on board, it will be easier to persuade others.
Get two for the price of one
One networking tip to take note of is to ask your investor leads if they know someone else who would be interested in looking at your startup. If it works out, you could end up with two investors on board! Investors aren’t likely to pass on a good idea – if they know their friends are investing, they’ll get major FOMO.
Investors who are interested will likely have lots of questions. Get planning for every eventuality. You should have some collateral to hand to send over to investors, such as a pitch deck or business plan.
Get used to ‘no’
Don’t let it get you down, but you’ll hear ‘no’ a lot more than you’ll hear ‘yes’. In this process, it’s normal. Don’t let it knock your confidence. If your idea is watertight, eventually you’ll connect with the right investor.
Looking to get investment for your startup? Check out the investor megalist, our free list of investor contacts.