Avoid these mistakes when reaching out to investors!
Obviously, we get a lot of cold outreach from startups. Unfortunately, a large share of outreach is definitely sub-par, which leads to either raising an early yellow flag or even results in a hard stop. As outreach is your first point of contact and hence it is absolutely decisive to nail this touch point to leave the best first impression. Ideally, you can be introduced by a shared contact, which is a strong signal for investors. Interestingly, more than 95% of all our deals are coming through warm introductions. However, many first-time founders seem to have no other choice but to send cold emails to start their fundraising journey, but is this really the truth? And how can you still crush your cold outreach to make it a success?
Let’s start with the mistakes that we see a lot in our inbox:
Founders that do not invest the time to get a warm introduction.
Sending multiple emails (for example to different email addresses, forgetting our previous answers or even the same email from different founders)
Sending meeting requests instead of pitch decks (and not including important basic information about the company, traction, and round/terms)
Reach out with generic emails instead of a personalized and relevant approach
These might appear obvious for some, but it’s the greater part of our reality. For us, entrepreneurship is about finding solutions, this is why we collected some suggestions below:
DO: Invest the time to get a warm intro!
At the very beginning it’s extremely hard to navigate the social landscape of the startup ecosystem. Don’t give up! It will get better very soon.
One of the most common things that successful and experienced founders do is to tackle this task with structure and a strategy. Most importantly they do a variation of the following steps to get to warm intros, especially at later stages when VCs are the prime target instead of angel investors. However, this works for angels just as fine.
Build a target list:
When creating your target list of potential investors, it's important to go into details. Consider the specific criteria that align with your startup's industry, stage, and mission. Look for investors who have a history of supporting ventures similar to yours or who have expressed interest in your particular niche.
Don't limit yourself to well-known investors; explore emerging players in the field as well. By both expanding your list and adding details to each investor profile, you increase the chances of finding the right investors who resonate with your vision and can provide valuable insights and connections.
Put in the work to understand how your prospective investors tick, what they are interested in and if your company could be a good match to their portfolio strategy. The list below shows the initial investor list of one of our portfolio companies, which serves as a good and well-structured example.
If you don’t know where to start looking for investors, use tools like Crunchbase or AddedValio/Startupdetector, to get a first overview.
Find your in-routes (e.g. utilize LinkedIn):
The next step is starting your “Investors CRM” and looking for potential introductions. The easiest way to start is with LinkedIn. LinkedIn offers a treasure trove of connections (especially with LinkedIn Premium) and helps you to find your closest contact.
Look up your angels or VC companies to find the right person to contact. Take the time to review your connections and identify individuals who may have a genuine interest in your startup and also know the investors you want to get to. Expanding your previous structure: Note down these contacts in your CRM and talk to them to identify their strength of relationship with your targets.
Also share your list with your close contacts and ask them to fill in the gaps and see which of your targets they know well. Seek their guidance and input on the best approach to connect with potential investors. By involving your network in this process, you not only gain access to their connections but also tap into their wealth of experience and knowledge. You will soon have a complete picture of your possible introduction landscape.
Once you have identified individuals in your network who can provide valuable introductions, approach them and convince them of your company. If they believe it’s a good opportunity, they will happily forward your deck, because it will shine positively on them as well.
But bear in mind that you still are the owner of the process. This is why…
What is most important here is to keep track of your ongoing contacts. Enrich your CRM with logbook information and track who made contacts to whom.
Watch out here: Use only your strongest connection to contact your targets and do not contact people from multiple angles. This normally shows you are not on top of your CRM.
Maintaining control over your outreach efforts is crucial for showcasing your organizational skills. Sending multiple introductions to the same person can create confusion and reflect poorly on your ability to manage relationships. To prevent this, maintain close communication with your network, keeping them informed of any progress or changes in your outreach strategy. By taking the lead and ensuring that introductions are well-coordinated, you convey a sense of professionalism and respect for everyone's time and resources.
The only exception is of course, if a large part of the network gets excited and people start talking about your pro-actively - which would be a dream scenario for most early-stage startups.
DO: Work on your outreach emails (cold + warm)!
Even if you could not find a warm introduction, you can still win the race by standing out in the inbox. In either situation, when crafting outreach messages, it's essential to strike a balance between brevity and completeness.
Start with a strong elevator pitch that clearly communicates your startup's value proposition, unique selling points, and target market. Keep it as concise as possible. The shorter the better.
Highlight key achievements or milestones to establish credibility and showcase your startup's growth potential. Including existing investor details, customer names, achieved revenue, etc.
Summarize the details of your current fundraising round and don’t be afraid to talk about them. Include the total fundraising amount, the type of funding round, and any other major terms (like cap, discount rate, pre-money valuation, etc).
You must include a pitch deck or a link to the pitch deck. We never accept any meeting requests without looking at your deck and most other investors treat it the same way. Otherwise, it’s impossible to allocate time to the most interesting deals.
Optional: If you have a Calendly scheduling page, include a link to make it easier for interested investors to schedule a meeting or call.
DO: Make it personal!
Even if you assembled the perfect content for your outreach mail, it still might not be enough. In today's fast-paced world, attention spans are shorter than ever. And we get dozens of emails per week from all kinds of different startups.
To make a strong impression, do not sacrifice personalization in favor of brevity. Tailor each message to the specific investor, referencing their previous investments, areas of expertise or something you read about them recently.
What should be obvious:
Never send emails via a newsletter tool.
Do not use “investors@startup.com” emails.
Also, don’t make your personalization too artificial but do show why this particular investor is relevant for you and how they could help your venture beyond providing capital. Show that you have done your homework and that you genuinely believe they could be a valuable partner in your journey.
Conclusion
In the world of startup fundraising, effective outreach is essential for success. Avoiding common mistakes and following best practices can significantly improve your chances of converting investors. Invest time in warm introductions, build a target list, utilize LinkedIn, and control your outreach. Craft concise and personalized emails, include a pitch deck, and make a strong impression. By implementing these strategies, founders can optimize their outreach efforts and attract the right investors to support their startup's growth.
Are you a founder and currently raising?
Hit us up, we are happy to connect: www.jvh-ventures.com/pitch