When you think of “investor outreach,” it’s tempting to see it as “fundraising on hard mode.” If you think cold emailing to cold leads with an email template swiped from LinkedIn is a grind, you’re absolutely right.
But what if you’re a founder with a great idea and not much of a network? Where do you start, if not with cold leads and an email template that removes the intimidation of a blank screen? This is what you’ll learn here, so you can skip some of the trial-and-error of investor outreach and raise your round faster.
|Perform soft outreach before active fundraising
|Stack-rank your outreach list of investors
|Show the investor why you chose them
|Use meaningful signals in your outreach
|Use bullet points in your outreach emails
|Mistake fluff for a positive signal
|Only go after the big checks
|Forget a clear call to action
Investor outreach do’s
Do start outreach before you start outreach
Nathaniel Jewell, founder & CEO of Recess.tv, begins “unofficially” fundraising about three months before he really starts fundraising.
“During this unofficial period,” he says, “I’ll get intros and reach out to the VCs on my list. I tell them that I’d like to meet with them and talk about what we’re doing but that we’re not currently fundraising. The soft raise is all about building relationships: these meetings are a great way to show me which VCs are a personality match.”
Do stack-rank your outreach list of investors
Not all investors are potential investors in your company. You’ll want to come up with your own ranking system for VCs, either based on geography, investment thesis, prestige, LinkedIn network overlap, etc.
When you’ve ranked your investors, we recommend sending outreach in waves:
- Wave one: Potential investors you know well, like family members, previous managers and colleagues, and other close connections. Ask them for honest feedback on your pitch deck you can implement for the next two waves.
- Wave two: People who can lead the round and act as a real-world litmus test for how investors outside of your close network will react to your pitch.
- Wave three: The “best of the best” list of firms. You reach out to this wave when you’ve incorporated all earlier feedback on your pitch. Hopefully at this stage you’ll also be able to show these big firms that you already have some momentum.
Note: When you send your pitch deck, Nathaniel Jewell recommends uploading it to DocSend to create a secure link and password for each firm. Restrict download access to prevent firms from creating a PDF of the deck, which strips it of the performance analytics you’ll need to improve it for future rounds.
Do show the investor why you chose them
Investors want to know why you want to work with them specifically, for reasons besides the paycheck. Mention companies in their portfolio that are similar to yours, both to show you did your research and to signal you’re not a risk.
Do use meaningful signals in your outreach
Signals are words that get investors excited about you, your business model, and your product. Some examples of positive signals include:
- You’re an exited founder
- You already have term sheets from a certain fund (name them)
- You’ve seen significant growth over a certain period of time (be specific)
- You have signed contracts, especially if they’re with big name companies (name them)
- You’re YC-backed
Do use bullet points in your outreach emails
Investors speed-read their emails. Develop bullet points that highlight words and numbers as positive signals. You may want to group your bullet points into three categories: team, product, and growth.
Investor outreach don’ts
Don’t mistake fluff for a positive signal
You may think certain signals about your business carry depth, but Stéphane Nassa, cofounder of OpenVC, cautions against these “empty” signals that are red flags for investors:
- Mentioning a motivated team—this should be table stakes, and a mention of it may come off as fluffy
- Mentioning conversations with funds or clients—everybody talks, and your conversations are not substantial enough to count as a signal
- Mockups, MVPs, and waitlists—these are no longer strong differentiators on their own, unless you have active users and user growth to go along with them
Don’t only go after the big checks
If you’re not starting with a large network, don’t overlook the small checks from friends and family. Sometimes the $1,000 checks bring $5,000 checks and those bring $10,000 checks, and so on.
When you view smaller checks as pathways to larger ones, you begin to realize your network is larger than you think. While much of your network won’t be able to invest $50,000, some can probably invest $1,000 or $2,000 and then bring in their uncle, their boss, their colleagues, etc. This is how you can maximize what might be a smaller network compared to other founders.
Don’t forget a clear call to action
Don’t spend so much time on the content of your email that you forget the most important part—a clear call to action. This is where you request a meeting with the investor, whether it’s a call or a face-to-face.
Some founders prefer to send a Calendly link while others enjoy the cordial back-and-forth of scheduling—the issue is known to be divisive—but either way, make sure to set expectations about when you’d like to meet and for how long, so the investor knows you respect their time.