Fundraising is a challenge for many startups, and is especially difficult for founders who do not have close personal ties to VCs. In this article, we address the first step in raising a venture capital round: meeting investors.
Many of the entrepreneurs we work with at OpStart are first-time founders based outside the Bay Area who come from nontraditional or minority backgrounds. In our experience, these founders can struggle to get an audience with VCs who are capable of leading their funding rounds. Even the best pitch decks are worthless when presented to the wrong audience.
We reached out to top VCs and asked: “how do founders manage to get meetings with you?” Their feedback exposed several under-the-radar tactics that any founder can use to reach a broader audience of high-quality investors.
We have included some high level topics as a summary:
- Twitter is Your Friend: it exposes what VCs are interested in and how they think, and offers the ability for you to build credibility by contributing to the discourse
- Warm Intros > Cold Outreach: second degree connections are crucial, so try to build relationships with “connectors” who can introduce you to VCs when the time comes
- Personalize Your Cold Emails: generic emails seem desperate and are usually ignored. VCs are more likely to respond to cold outreach if it is thoughtful and personalized — not just to the firm, but to the individual you’re contacting
- Focus on People > Firms: if one partner at Sequoia passes, it doesn’t mean Sequoia passed. Feel free to reach out to multiple partners from the same firm — you only need one of them in your corner to get a deal done.
Twitter is Your Friend
Twitter has become the preferred social media platform for most VCs. You can use it to learn how a VC thinks and communicates before deciding whether/how to approach them. Additionally, you can use it to learn from fellow founders, VCs, and other thought leaders in the startup world. The more you engage with this community, the easier it will be to establish connections and commonality with VCs in the future.
If you’re looking to actually meet VCs via Twitter, follow this 5 step process:
- Create a personal account for business purposes: your Twitter account could be your first impression for VCs, so ensure it sends the right message. (When in doubt, mirror the style of your favorite founders and investors.)
- Find your crowd: look for investors (and others in the startup community) who talk about your industry, share your interests, or think similarly to you. Follow their accounts.
- Learn how investors think: Twitter exposes what VCs are thinking about + how they think and communicate. Use this data wisely.
- Join the discourse: you can reply to investors’ tweets and tag them in your own posts if you have insights to share. Avoid pitching your startup right away, just focus on building credibility.
- Slide into the DMs: if an investor follows you back, DM them with a link to your product (or website, pitch deck, etc.) and ask for their feedback.
This process takes time, so start early and engage authentically. If you’re not comfortable contributing on social media or engaging via DMs, you should still use the platform to learn more about VCs before you approach them.
Warm Intros > Cold Outreach
This is widely known, but is worth repeating: you should always look for warm intros before reaching out cold. VCs have very little data to work with when evaluating an early-stage startup, so one thing they care deeply about is the founder’s reputation. If you are introduced and endorsed by someone the VC trusts, they are far more likely to take a meeting with you.
If you already have investors onboard (perhaps from a prior funding round), start by asking them for introductions to other VCs in their network. If you’re raising for the first time, however, you may have to get more creative. We recommend looking for second-degree connections: people who aren’t VCs but have relationships with VCs.
A few tips for getting warm intros to VCs when you don’t have an obvious connection:
- Look for common connections on LinkedIn: Tools like CoSell.io make it easy to identify second-degree connections and request introductions.
- Consider the quality of the connector: You ideally want your introduction to come from someone the VC respects, like a founder in their portfolio or another individual (advisor, lawyer, angel investor, etc.) they have worked with previously.
- Build relationships early: By attending startup events (either local or virtual), you can engage with other entrepreneurs and investors to showcase your company / product and establish genuine connections.
- Consider accelerators, incubators and pitch competitions: participating in these programs certainly does not guarantee that you will get funded, but they can provide validation and introductions to second-degree connectors with good VC relationships
- Find mentors: other founders and operators will often be generous with their time and advice – get them excited by what you’re building and they may be willing to introduce you to their investors.
Similar to the advice above, it is critical to give yourself time to develop these second-degree connections so they do not appear forced or transactional. If you connect authentically and build genuine relationships, the introductions should follow.
Personalize Your Cold Emails
Writing cold emails is extremely difficult, especially when your target audience is both busy and selective (as most VCs are). If you take this route, you should expect to be ignored more times than not — but there are proven ways to increase your response rate.
VCs are more likely to respond to an email if it is thoughtful and personalized. You should invest time upfront to learn about each VC firm, as well as each partner you could contact at that firm. This homework is easy to do in today’s world: Twitter, LinkedIn, Google, and VC firm websites can all provide valuable information on an investor’s track record, communication style, personal interests, and more.
The first thing you should consider when building a target list is the VC firm’s thesis and criteria. If you are a pre-seed ecommerce startup raising your first $500K, don’t waste your time emailing growth-stage funds that focus on B2B SaaS. Many firms list their criteria on their website; if they don’t, you can look at Crunchbase to get a sense for which deals they invest in (note: look for a firm’s first investment in a company, as many seed-stage VCs will write “follow-on” checks into later stage rounds). A few specific criteria you can use are stage (pre-seed, seed, growth, etc.), check size, industry focus, and geographic focus. If you come from a minority background, you can also seek out funds that specifically target founders of similar backgrounds. And if the fit feels like a stretch, it probably is — move on and keep searching for firms that appear to be great fits.
Once you’ve identified a target, write an email that is clearly personalized to your recipient. Mention a company similar to yours (not a direct competitor) that they invested in previously. Reference a tweet or blog post they wrote that aligns with your vision. Drop names of common connections, events you were both present at, or interests you share. Do something to make investors feel special and prove that you’ve done your homework. If you need to hunt down an investor’s email address, try using hunter.io or similar services to find how a firm typically sets up email accounts (i.e., firstname.lastname@example.org vs. email@example.com).
Certain elements of your cold email can certainly be templatized. We’ve found that it’s best to customize your introduction, then paste a templatized blurb describing your company and funding round. Your blurb should include a link to the pitch deck, along with a brief elevator pitch on the business that highlights some of your best selling points (i.e., a large TAM, significant early traction, founders with notable track records, etc.). If you are actively raising, you can also include a sentence or bullet point summarizing your goals for the round — don’t mention valuation, just list the desired funding amount, round title (i.e., seed), and why you’re raising.
Finally, keep your emails short and sweet! Investors are likely to delete a long email before reading it, so focus on intriguing them rather than telling your full story. If you pique their interest, they will probably respond and give you an opportunity to share more details.
Focusing on People > Firms
VC firms are often just loose collections of partners who operate independently. Each partner has the opportunity to lead investments for the firm, so you only need one partner on your side in order to secure an investment from the firm. If you do secure an investment, the partner who “led” the deal is likely the one who will join your board or work most closely with you moving forward — so keeping them on your side is important too.
If one partner passes on a deal, it doesn’t mean the entire firm passed. A16Z has nearly 100 partners listed on the team page of their website today — they don’t all agree on every deal the firm invests in, so don’t assume they will all come to the same conclusion regarding your startup. You should start off by targeting the specific partner who seems most focused on your industry and most aligned with your views on the world. If that person passes, find the next best candidate, and keep going until you’ve exhausted all logical options.
As we mentioned previously, ensure your outreach is tailored to the specific person you’re emailing, not the firm in general. It is usually best to target partners, as they are the ultimate decision makers, but you can also reach out to junior team members in order to get a foot in the door.
Finding and meeting VCs can be a challenging task for startups, especially for founders without established personal connections to the VC community. There are strategic ways to cast a wide net and build a network from the ground up. The key to all of the outreach methods above is to take the extra time to do the research and make it personal. Leveraging social media platforms like Twitter, working an already established network for warm introductions, conducting research to make cold outreach tailored to each individual, and focusing on building one-to-one relationships rather than relationships with firms will ultimately get founders further than reaching out to hundreds of VCs with the same copy-and-paste message.