5 Steps to Finding Investors for Your Start-up
When you’re ready to start talking to investors, one of the most challenging parts can be just that: actually talking to investors.
Most venture capitalists and angel investors receive dozens of pitches every day and simply don’t have time to meet with everyone. To make it more difficult, it’s not uncommon for first-time entrepreneurs to need to speak with 50+ investors before closing a round of funding. So as an entrepreneur, you’re going to need to identify dozens of people who could potentially be interested in your company.
The good news is, there are now more resources than ever to help you find the best investors for you—and actually reach them. Here are five tricks I found useful in getting meetings with the right people.
1. Build an AngelList Profile
AngelList is a great way to both learn about investors and let them learn about you. Creating a profile—including specific info about your company, product, and team members—makes it easy for people who are interested in your space to find you.
Once you’ve filled everything out, share your profile with your friends and professional acquaintances and request references. When people follow your company, it will show up to others they know (and hopefully pique their interest). When we were fundraising, I watched for new investors who chose to follow InstaEDU or my personal profile and sent each one a personal note. This ended up leading to several meetings and one investment.
2. Create a Strategic List of Investors You’d Like to Meet With
Given the odds of any individual meeting resulting in an investment, it’s easy to want to cast as wide a net as possible. But given that more than 500,000 people in the U.S. have made angel investments recently, you can save yourself a lot of time and hassle if you focus your initial efforts on the 30-50 investors who are most likely to be a good fit for your company. (You can always expand the list later.)
I started by going through the education section of AngelList to find people who had invested in other edtech companies that weren’t directly competitive with us. I then took the list to other entrepreneurs and asked for their thoughts on who I should add or remove from the list, based on their experiences. Fellow entrepreneurs are an invaluable resource for helping you identify potentially interested investors not yet on your radar, as well as for flagging investors known for being difficult to work with or who aren’t actively investing.
From this process I ended up with a list of about 40 investors who I thought would be most beneficial to meet with. I entered all of them into a spreadsheet and included firm (when applicable), mutual connections, education investments, other relevant investments, location, and any notes I wanted to remember (e.g. has two kids in high school).
3. Comb Your Networks
Because investors receive so many pitches, they often highly favor companies that are introduced by a common contact. (Think about how much stronger an applicant is at your company if he or she is referred by a current employee!)
So once you have a list of investors you’d like to meet with, go through it person-by-person and see if you have any mutual acquaintances. If so, great! But before you ask your contacts for an introduction, get together with them first so you can show them how awesome your company is. Ideally, your common connection should feel like he or she is doing a favor for both you and the investor by making the intro.
When we were fundraising, once someone agreed to make an introduction, I would send a 3-4 sentence pitch on our company so he or she could include it in the initial introduction email. Then I watched closely for the intro so I could follow up as quickly as possible. Elad Gil has a great blog post on answering investor intro emails, which I found really helpful in drafting responses.
4. Thoughtfully Craft Your Own Introduction
Of course, there will likely be some investors who you can’t find an introduction to. When this is the case, you simply need to be more thoughtful and selective about who you reach out to, crafting emails that prove you’re not just sending out hundreds of cold emails to investors. For example: “I don’t usually send cold emails, but between your investment in Company A and your involvement with Project B, I couldn’t help but reach out and introduce myself.” When we were fundraising, I had a good response rate from the investors I reached out to cold, but that’s because I didn’t reach out to many, and when I did, I had a very specific reason why I thought they’d be interested in InstaEDU.
5. Give Investors a Reason to Reach Out to You
As much as your company wants to find great investors, investors also want to find great companies—meaning the courtship goes both ways. So, make sure you spend some time putting yourself out there. Even if your product isn’t live, you can still generate attention for your team and your mission via thought leadership. Degreed, another edtech company, did a great job of this pre-launch, writing guest posts for tech blogs and starting conversations on Quora. After a personal blog post of mine was shared by StartupDigest, I had a number of investors introduce themselves and ask to meet.
Now, even with the best fundraising tactics, be prepared to get turned down by investors or not hear back. Don’t let that get to you, but also don’t be afraid to be diligent about following up in a professional manner. If you don’t hear back in a week, send a quick follow up. After that, continue following up if and when when you have news to share (e.g. a product launch, key metric that you hit, commitment from a notable investor). This also applies to investors you’ve met with but haven’t heard from since.
You’re going to hear a lot of “Nos”—but that just makes the first time you hear “Yes!” that much more exciting.
Alison Johnston Rue is the CEO and cofounder of InstaEDU, an online tutoring company that makes it possible for student to get high-quality, one-on-one academic support the moment they need it. Previously, Alison worked for several awesome technology companies, including Box, Aardvark, Nextdoor and Google. She loves to travel and has a disturbingly large collection of hot sauces.More from this Author