For startups in need of financing, there is nothing more sought after than access to angel investors or venture capital firms. While venture capitalists (VCs) are willing to invest due to the potential of high returns, they also experience major losses when companies fail – making them extremely judicious about the companies they choose to support.
We’ve recently discussed what to do and what not to do when meeting with VCs…but how do you even get to that key meeting? That’s where intros become of utmost importance. However, it can be tricky to know who, when, and how to connect.
Let’s start with the cold intro (or outreach). A cold intro is an email, call, or even LinkedIn message to a VC that you’ve never met and have no connection with. This approach is automatically more difficult than other options due to the lack of an existing relationship. While personalization and actionable requests can boost your cold intro response rate, you will still probably get minimal interest. Worse, as many VCs prefer sourcing deals through referrals from their trusted network, you could actually hurt your chances to pitch your company down the road.
A warm intro is often a more useful approach. Essentially, this means that you’ve reached out to someone who has a connection to a VC, and that person will introduce you and your company. There are a variety of people who can make such an introduction: notable entrepreneurs, entrepreneurs who have had an exit, entrepreneurs who have founded companies within the VC’s portfolio, service providers (lawyers, bankers, accountants), and other investors (particularly those who the VC has already invested with or those the VC wants to invest alongside). You can use LinkedIn to view connections, attend networking events to build your professional relationships, or reach out to other founders you already know. Essentially, you want to build a level of trust between you and the VC, and going through someone both you and the VC already trusts can therefore increase the trust surrounding your company. Each connection does have various associated risks, however. For example, an accountant may be acquainted with a VC but may not be a trusted resource for judging investments. Likewise, another investor may hold a portfolio of companies in fields unrelated to that of the VC firm or have a track record of poor returns.
How you should intro is something completely different. Essentially, you want to create an email that can easily be forwarded on to the VC. While it may be instinctive to want to include as much information about your startup as possible, it’s better to keep things short and to the point. Introduce your company, ask to speak to a specific person at the VC firm, provide data, include impressive milestones, and end with a specific call to action. Make sure that you point out any employees you know at the VC firm to remove confusion and are upfront about multiple touchpoints, and include a way to reach out again in the future – say, any developments worth sharing in a follow-up email or any additional funding figures a month or so down the line.
Keep in mind that you may even need a warm intro to your primary connection, if he or she is someone you’ve met only once or who may not remember you. If you have a secondary connection you can leverage, that can be a better way of making sure your email is read instead of just adding to his or her unread emails!
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