Justin's Journal: How to Find Investors (Part 2 - Steps to Finding and Meeting Investors)
3 actionable ways for you to start meeting the right investors — aka those who will be interested in your company.
This is Part 2 in a trilogy of Justin’s Journal entries about finding and meeting investors. Last week, we covered the don’ts of reaching out to VC’s. This week, you’ll learn what you should do when you’re ready. Subscribe and share - next week we’ll cover some tips on building your network from zero.
May 1, 2018
1. Identify the right type of investor and build your list
You don’t want just any investor; you want people who have the ideal resume, background, and demonstrated interests in funding your startup.
The answers to two basic questions will guide the filtration process:
What round am I raising?
What category of startup am I?
If you’re a biotech company, don’t target investors who haven’t been involved in biotech.
If you’re raising a seed round, don’t target investors who exclusively invest at later stages. You want to respect everyone’s time and carefully curate your list.
This simple rule alone will narrow down your scoping process.
Get as specific as possible
Don’t just stop at the firm.
Target specific partners, angel investors, etc. You want the people with the relevant background. At most firms there are different folks who specialize in different industries.
If you’re a biotech company, target the biotech partner. Choose the person who’s most relevant to you.
Knowing that a certain firm has invested in your space is only the starting point. You want the person with influence who can make a decision about your company.
Organize your list
I usually track my curated list of investors in a Google Sheet with all relevant details.
I don’t want to be too prescriptive about the length of the list, as there’s no magic number. However, I generally find that a minimum of 10, and ideally in the 15–20 range is good. Too many more and it’s hard to do it well and target effectively; much less and you’re not feeding the funnel.
Use your network
Another source of investor leads — and your best bet at actually reaching them — lies within your network.
This requires a distinction. The next point is about using your network to get connected to the investors you’ve already identified. Here, I mean that you actually use that network to identify the investors in the first place (at which point the connection is predetermined).
Talk to your friends and network about your company and lay out your investor criteria (industry + investment stage) to see who someone knows. Odds are, you’ll get multiple leads this way.
2. Find out how to get connected
People are always much more receptive to introductions from people that they know and trust. The “warmer” the person that’s giving you the intro, the better.
Your primary objective with this process is to find the best person to give you an intro; someone who is seen as credible to the investor. Existing investors
If you’ve raised a seed and are targeting a Series A, you have the best type of referral: an investor in your company.
Referrals from investors are the strongest because they’re putting their money where their mouth is.
It’s a good signal if I recommend a startup that I’ve recently become acquainted with to an investor friend; it’s an extremely strong signal if I’ve already put my own cash on the line.
Find out how your current investors can connect you with someone on your list, and use them as a method for building the list in the first place. When you are asking your investors who they can intro you to, feel free to share the Google sheet you are using to track with them. This is much better than just asking ‘What investors do you know that would be interested in my company?’ Odd’s are that that investor doesn’t keep a list of other investors and their interests in their head — it’s much easier for them to look at a list and see who they know.
Why you need double opt-in
There’s an awkward stage between a cold email and a fully-vetted introduction: a “single opt-in” email.
That’s when someone I know makes an unsolicited intro, without first running it by me.
There’s a lot of companies that I’m not interested in meeting with. Maybe I’m not interested in the space, have a conflicting investment, or have soured on the space.
That’s why double opt-in has become a standard best practice for introductions. Both parties get briefed on the other so that when the introduction happens, you can move forward productively.
You don’t waste anyone’s time. The alternative — single opt-in, or none at all — is a waste of everyone’s time. It also puts the recipient in an awkward position. I’ve had to tell a friend or acquaintance “no thanks,” putting everyone in an uncomfortable spot.
Having a person who can act as a connection to an investor isn’t enough. To get an investor’s attention and not be a hindrance, you need the double-opt-in.
3. Use double opt-in to send a super targeted & concise email
Here’s how double-opt-in works:
Send an email to your connection that can be forwarded.
What you do
What makes you special
A “hook” to get them interested in learning more.Two paragraphs and extremely concise
Your connection emails the investor to say “Here’s a summary of these guys, do you want an intro?”
Investor has everything they need (in digestible format) to learn more, or pass.
It’s that simple.
The magic is in the email, the strength of the connection, and the ultra-relevance of the investor (as established in step 1).
This is why I say there are no excuses if you really want to meet investors.
Make sure you’re subscribed for Part 3 next week - How to meet investors when you really have NO connections.