Do you want to be mates?
Your guide to investor outreach
Many founders I've worked with think all they need to do to get a meeting with a VC is to find an email address online and ping over a pitch deck.
Trust me, you'll be waiting a very long time for a response if that's your strategy.
Imagine you're at a bar or in line at the store, and you end up chatting to someone and then bang! Suddenly, they're trying to sell you life insurance or a used car.
It's not cool is it? You need to take a similar approach with your prospective investors. Take your time, get a foot in the door, and then you're ready to make your move.
If you treat your VCs like slot machines, you won't be getting a pay-out.
In this article, we'll look at how to gauge the temperature of a prospective lead and how to get that all-important introduction.
It's not just about the pitch; you need to network
You've put together a prioritised list of VCs you want to work with… what comes next?
The best thing to do is to have a systematic approach to not only how you'll reach out to your potential investors, but how you'll reach out to each one. Trust me, a half-arsed connection request on LinkedIn just won't cut it.
When you're tracking your VC leads, you can also track how 'warm' they are towards you:
Do they open your emails?
Do they interact with your content?
Have they ever used your product or service?
Do they know you, either personally or professionally?
Have they already expressed an interest in you?
Are they likely to invest?
A lot of this will be subjective – you may think you're BFFs with a VC, but they may beg to differ!
When you know whether an investor is 'hot', 'warm' or 'cold' towards you, you'll better understand how to reach out to them.
We'll look at hot and warm leads later in this article and focus on cold leads in the next part – just as I bet you're all *super excited* about the prospect of cold outreach.
The three rookie mistakes
New founders typically make three significant mistakes when reaching out to investors.
Number one: They think all money is good money. Just because an investor is willing to throw money at you doesn't mean they're the right person to work with. Think of getting involved with an investor like getting married – you don't say 'I do' to a horrible person just because they've got a lot of cash.
Number two: They think money is the most important thing in an investment deal. It's more important to build up good relationships. Money comes and goes, but you should be playing the long game and building up solid connections.
Number three: They think it's all about taking. You need to give as much as you get with an investor. Taking the money and running never leads to a healthy working dynamic and can even lead to a bad reputation amongst other VCs.
How to network like a pro
Could you name all the people that you know? No, I don't mean your great aunt Mabel who you only see at Christmas, although she might have a few useful connections you don't know about.
Get a feel for the people you know in the business world:
How many people do you know?
What industries do they work in?
Where are they based?
How senior are they?
Are these people well-connected?
When you know who you're connected to, there are two areas you need to focus on. The weak links at the edges and the hubs in the middle.
Focusing on the weak links will strengthen your network, while doubling down on your super connectors will grow your connections even more.
Polish up your elevator pitch and offer to take them out for a coffee.
My top tip? Look up old college buddies. Even though you might not have got value from your degree, that person you did a project with once may now be a handy person to know! Lawyers and advisors can be good to connect with too, just as they know a lot of people in the investment world.
It pays to start networking as early as possible before pitching – at least three to six months beforehand. You need to think ahead – if you want to target a particular investor, who do you need to reach out to in order to get to them?
The leap-frog loop
If networking seems like a challenge, the leap-frog loop makes it a heck of a lot easier. It's a simple approach to expanding your networking in a series of repeatable steps.
Intro: Get connected to the people closest to you that can help push your business forward. There's always someone you can reach out to!
Build: Build mutual connections with these people. Look for things you have in common that you can talk about, whether that's a shared Alma Mater or a love of chilli dogs.
Delight: Help these connections out. It's important to be authentic here – nobody likes a fake friend.
Invite: Get these connections involved in your adventure in some way. This could be anything from advising, making introductions or investing. Make the call depending on who you've connected with, and if they say no – don't take offence.
Repeat: Repeat the cycle with new connections. Some won't work out, but the ones that do… totally worth it!
Don't forget to check in on your relationships regularly – connections decay over time, so put the effort in, even if it's to just say hi! Think about how you can stay on their radar.
It's getting hot in here: Hot lead networking
These leads are the ones who are ready to learn more about your business and how they can get involved.
They're the ones that already have a direct relationship with you. Perhaps you worked with them on another project or in another role, or they came to you because they were genuinely interested in your business.
With these leads, you're very nearly there. You just need to get them to trust you and not do anything dumb that will turn them off from investing.
You want to develop a reciprocal relationship with these investors. Ask for advice, introductions, and feedback from them – everyone's ego likes being respected by being asked for their opinion.
As the famous philosopher Pitbull once said: 'Ask for money and get advice. Ask for advice, get money twice.'
Similarly, if your hot lead needs support, invest the time and see how you can help them out.
1-to-1 catchups are one of the most high value ways to get people to know you and your story. Catch up for a coffee or if you're in a position to do so, go for lunch (I hear you can get a great 2-4-1 deal on meals at Burger King)
You want a true relationship here – one where you're genuinely happy to help without expecting anything in return.
Getting warmer: Warm lead networking
Your warm leads are the ones that aren't ready to invest but are ready to engage. Your main aim is to get them to like you and understand your brand, in the hopes that they will eventually become a hot lead.
Many investors see getting a warm lead as a 'litmus test' of your entrepreneurial skills. It shows that you know how the investment game works and are savvy enough to understand how to target them. That can take you a long way.
The first place to begin is with a targeted VC list. Once you know who you need to reach out to, you can start finding contact details. Scour the internet and speak to your connections to see if they can get you an introduction. Can't find anyone? Time to crack out the leap-frog loop.
Warm intros are all about borrowed credibility – the closer the relationship of your warm introducer to the investor, the better.
Conversely, a low-quality intro might harm your chances.
To simplify things, a scale can help:
Platinum connections. These are the ones that will guarantee a pitch meeting with your VC of choice – think VC partners and successful founders. Hard to get but well worth the effort!
Gold connections. These introductions might not get you a pitch meeting straight away, but will get you a fast pass to the top of the funnel. Think other VCs and expert influencers
Silver connections. These introductions will get you on the VC's radar and give you the means to engage with them directly. Think respected lawyers, accountants and advisers.
Bronze connections. Useful if used in the right way at the right time, but typically can hurt more than they help. Think existing investors and VCs they've worked with but don't really like
Tin connections. To put it nicely, these connections are garbage. It's likely the connection walked past the VC at a conference, and that was the extent of their meeting. Avoid
In summary: networking is the number one unwritten rule of the fundraising process
Many founders would rather eat a box of live spiders than schmooze with VCs. I get it; if you're not a fan of talking to other people, it can be a long and tiring process.
However, the key is working smarter, not harder. When you look at the process logically and adapt your approach depending on the investor, you can save a lot of time and potential headaches.
In the next part of the article, we'll be looking at how to deal with cold prospects – the ones that know absolutely nothing about you. How can you turn things around and make them your number one fan? Stay tuned.
Is it me, or is it chilly in here? How to contact those cold leads
Let's face it, nobody likes cold outreach. Not sales, not marketing, not scaleup founders.
Cold calling is the last resort when it comes to getting VC leads. It takes a long time, it's frustrating, and you're not likely to get many responses.
However, when the runway is getting shorter by the day, it can sometimes be the only option.
So, don your woolly hat, get those mittens on and let's look at the world of cold contacting.
What's a cold lead?
A cold lead is one that hasn't heard of you and is substantially less likely to invest than a warm or hot lead.
The primary approach when it comes to a cold lead is to make them aware of you in the hope that they will like what you do.
It's a challenge. Not an impossible challenge, but a challenge nonetheless.
Do the maths
The response rates for cold outreach are low. Anything above 2%, and you're either very convincing or very lucky.
This means cold outreach is a volume game. Despite this, don't be tempted to email everyone you know within a 500-mile radius. It's still worthwhile to qualify your investors and identify who is most likely to respond.
Don't be afraid to ask for help. Get your team to help prioritise investors and personalise the messages you want to send.
Don't upload your pitch deck to a VC site
This is the equivalent of sending a pitch to a generic email address – it's not going to get you anywhere. It's likely that the office intern will check what's been uploaded every couple of weeks when they remember to do it.
Most VCs work on the principle that if you really are an entrepreneur, you'll find a way of identifying their personal email. So do the groundwork.
No means no
If an investor at a VC passes on your investment, don't send it to other investors at the firm.
If you don't get a response? That's okay; feel free to try someone else. But a firm no? Time to move on.
Try LinkedIn first
LinkedIn can be an excellent way to reach out to investors, especially if they're on the platform frequently or have a lot of connections.
Always send a note with a connection request but don't take offence if you don't hear anything back.
Paying for InMail will ensure you get an email delivered to their LinkedIn mailbox, but there's no guarantee that they'll read it. My list of unread messages on LinkedIn? Huge.
All your emails need to be personalised and sent individually. Don't be *that* person who sends an email to everyone at the same investment firm.
Take the time to send a high-quality, well-crafted message. It may take a little longer, but it increases the chances of a response.
Plan a follow-up
You're typically not going to hear back from a prospective investor after one email. You need to be persistent. VCs are busy people, and they don't have time to answer every email they get.
Follow up twice if you don't get a response, and be sure to add value with every message.
Going 'can you respond to my original email please?' is a dick move and won't get you anywhere.
Need a little help crafting your emails?
I've been that founder who has sent multiple cold emails to VCs. I've also been the VC who has read hundreds upon hundreds of duff email messages.
With this in mind, I've put together a primary of VC contact outreach email templates you can use that will increase the chances of you getting that all-important reply.
Send me your deck…
The screen test. Those two little words strike fear into the hearts of entrepreneurs across all industries.
'But JB', you say, 'surely asking to see my pitch deck is a good thing?'
Sorry to break it to you bud, but it's not.
A screen test is when an investor takes two minutes (if you're lucky) to skim through your pitch. They do this to decide if they want a first meeting or to give you a hard pass.
Of course, if they've already committed to a meeting and have asked to see your deck in advance, that's a different story. But if they've asked to see if when you've requested a meeting, it can put you in a rough spot.
VCs get up to 1,000 decks a year, so you can see why they do this.
However, if they're under pressure or in a rush, it decreases the chances of you getting a positive response.
Here's how to increase the chances of passing the screen test.
Hold some information back
You will have to send something over; otherwise it's an automatic pass. However, sending a condensed version of your deck can be in your best interest. That way, the investor will (hopefully) want to know more.
Provide a prelim deck covering 70% to 80% of your full deck. Don't send over your full deck, and conversely, don't send a teaser of your deck. VCs don't like that.
I like to send over an email with a 1-page summary of the business when I do cold outreach and then the condensed deck if they ask for it. That way, you seem proactive without giving too much away.
Always send as a PDF
A PDF can be viewed on desktop and mobile and is relatively small, meaning less chance of the technology gremlins messing with your document. A techy VC who hasn't had their morning coffee might automatically pass you if they can't open it.
Never send an editable PowerPoint or Google Slides document. You don't want a VC to accidentally mess around with it or be able to see slide notes that you don't want to share.
Alternatively, use a link sharing facility like DocSend, so you can see when they've opened it.
I'm not sponsored by DocSend; other link sharing platforms are available. But DocSend, if you want to send me a free t-shirt or baseball cap… You know where I am.
Make sure you have a good pitch deck
I won't go into too much detail here as I've already written a lot of info about creating a pitch deck.
In summary: Be brave, be persistent
Cold prospecting is never fun. I get it. However sometimes it needs to be done.
From my experience, most VCs prefer a warm intro, even if they openly claim they will accept cold pitches. After all, would you rather eat delicious steak or a cold boot?
By investing in your networking, you're reducing the chances of having to do cold outreach.
What's Next? We're looking at the DD process
What do you need to do after pitching, and why do VCs insist on knowing everything about you? They're not just being nosy, honest…
Advice on how to find hot start-up investment leads, get warm introductions to VCs, and approach cold email outreach. From Jonathan Bullock, ex Google Chief of staff & SoftBank COO