4 Strategies for Cultivating Relationships with Investors
When you start a business, seeking capital is a path many take to fund their business growth. Fundraising can be both challenging and rewarding. In fact, many founders feel overwhelmed by the process. From product-market-fit, to the pitch to identifying potential investors and negotiating deal terms - there are several key steps in the process. One of the most asked questions we hear is - how do you identify and cultivate relationships with VCs? So, we are breaking down 4 simple strategies and steps to find and build relationships with your target investors.
Research Investors That Align with your Business Model or Industry
Conduct Thoughtful Outreach
Track Conversations and Stay Organized
Keep Investors Informed and Get them Excited About Your Business and YOU
1. Research Research Research
The first step as you embark on the journey of fundraising is identifying your potential investors. There are several tools to help you get started. Google, Crunchbase, TechCrunch, PitchBook and AngelList will be your besties at this stage.
To find the right VCs you need to conduct a search on three fronts, 1. Similar Companies that have been funded 2. VCs that are passionate about your industry, founder type or business model 3. Find out the VCs that are making active investments at your business stage (ie Pre-Seed, Seed, Series A).
It’s important to select a VC who believes in your business, your vision and you as a leader. So while you are researching VCs, dig further into their insights, thought leadership, and specific thesis they might have published to gauge how aligned you might be with their thinking and approach.
Make a list, a long one, of all the VCs from coast to coast (and even abroad) who are on your target list. You can narrow this as you go, but we suggest having 50 to start.
Once you have your list of firms, a VCs Team page and LinkedIn will be your friend. Often VCs have a generic way to submit a pitch. Do not do this. And only utilize LinkedIn to scope teams and titles. When it comes to outreach, you need to reach someone directly through their inbox with a personalized message.
After you have identified the ideal contacts, write their names, search your common connections and move to the next phase!
2. We’re ready for contact
This may be the most important stage. Gulp. There is no dating app for this. No swipe right. So you have to dust off your writing skills and truly write a very compelling email to a total stranger. No pressure.
Conducting thoughtful outreach entails considering your investors as a person vs. a firm. Learning about interests, connections, and points of view that the person has will help you personalize a message that is more likely to resonate and make a connection.A great way to do this is by utilizing Google to search the VC firm and a few of its members, founders and partners. See if any of the partners are active on social media and mentioned in the press.
An example might be that you’ve just read a blog post, article or press release where the investor has shared their point of view. You could comment on this and compliment them, or find a common place, theme or interest to spark a conversation.
Example:
I just read your thesis on _. We just created and launched a company that does _, which seems aligned with your ideas on _. We really love the approach that your firm has, and have tracked the success of several of your portfolio companies, such as _ and _.
After making small talk, you’ll want to cut to the chase and create a compelling reason for the conversation to continue. This is where your “pitch” has to be perfect. Tell them in 2-3 sentences why you think your business deserves to be considered.
Example:
“We’re creating the first technology to help _ do _ by utilizing our _ to live more _. Since launching in _ we have grown _% and are looking to capitalize on this momentum through raising $_ so that we can hire _ and build _, in addition to funding our key marketing activities.”
Many investors won’t respond. That’s a reality. They get inundated with requests and outreach so you need to make an impression. Another route you could take is to utilize your network for warm introductions, and tap personal contacts that you can use as a reference - these emails have a greater likelihood for a response.
3. Stay organized
Once you’ve started the process of doing outreach it will be important to keep track of details, conversations, outcomes and next steps. You can utilize a spreadsheet or invest in a CRM tool like Hubspot to create a dynamic Investor Pipeline.
Things you will want to track before, during and after your fundraiser are;
VC Name, Location, Industries, Portfolio Companies (not all), Website, Typical Check Size, Amount they might Invest, Interest Level/Probability of Investment, Dates of Calls, and Contact details of investors.
You’ll want to create a process that helps you assign yourself tasks and next steps so that you never drop the ball on important follow ups. Starting organized will help you keep your team informed and save you time!
4. Become a stalker
Not really. But often the name of the game is persistence. Whether it’s sending an email after you’ve been ghosted or you keeping interested parties informed and excited - make sure to consistently reach out to investors to update them on about your progress, relevant business milestones, and the even compelling market statistics.
Keeping your investors engaged will demonstrate how committed you are to making a difference and why your company is worth investing in. It helps you stay top of mind and on task with letting investors know your timeline. And most importantly, it will showcase that you are not afraid to make an ask, and stay on top of prospects - which is a great asset!
A few ways to keep in touch are by sending an article of interest, sharing a company milestone like a metric that you achieved, sharing a personal story that might be common ground, asking for feedback on an idea or lastly, recognizing their work achievement.
Cultivating and maintaining your relationships with investors is the most impactful way to ensure your investors get to know you. There are alternatives ways to do this - without being a broken record through emailing, such as - joining a community or attending an event where you can get access to investors one on one. These small steps close the gap between not knowing someone well and having a shared experience.
As many founders and investors have expressed, there is more ‘art’ than ‘science’ in the process of fundraising and women founders are still breaking down barriers. If you need help, send us an email at sarah@campsix.co.