How to Reach Out to a Busy Investor
Entrepreneur's New Year’s Guide
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In every entrepreneur’s journey, investments are something he/she can’t avoid. In fact, quite early on in the journey, start-up founders start building their network of investors so that when the time is right they can turn to the same network to raise funds.
But investments, don’t come easy. It often involves multiple rounds of back and forth with the investment offices along with numerous calls scheduled for due diligence. And sometimes, even after all of that the answer is a no.
So, is there a trick to raising investments? Entrepreneur India spoke to start-up founders about the do’s and don’ts of raising funds.
How to Reach Out?
It’s no surprise that with the growing number of start-ups in the country, the phones in the investment offices keep ringing. When you meet them at events, investors don’t really have the time to listen to your entrepreneurial journey.
So, how do you really reach out to them?
Harshil Mathur, CEO & Co-Founder, Razorpay believes that every investor is different, and each has their own set of criteria that they use to make decisions when it comes to funding. Hence, there is no set rules that applies to all.
Research on the Investor
Don’t just walk into a meeting with no prior information about the investor. Spend some time researching on the investor, said Mathur. “Ascertain whether they are interested in your idea or pitch, whether they have invested in a similar business before and if possible, understand what has been their experience,” he said.
To add to that extra zing to your interaction, Mathur said that it often helps to learn about their personal and professional interests.
Go Through a Reference
Entrepreneurs are always up and about building their network. From events or conferences or even a party, you never know from where you might build the right contact. Rahul Garg, Founder & CEO of Moglix, believes that the best way to approach the investor is through a reference or a common connect who knows you and your venture/startup really well. “Investor network usually values the reference route as they are confident that the referee would only share the connect if they see synergies at both ends. Also, there is some degree of unseen transparency and in case of a dispute or issue, they can speak well of you,” he said.
Of course, Social Media
How can one ever forget social media. Garg said that social media, specifically LinkedIn and Twitter are fast evolving as effective networking tools. “However, it is important to keep the conversation ‘relevant’. Gauge the investor’s interest through his social media conversations before pitching to him,” he said.
Apart from this, Garg added that there are various startup and accelerator programs that offer networking opportunities. It is important to identify the relevant network and tap those areas.
What You Should Do
When you have finally scored that golden meeting with an investor, are you often confused about what you should do? Well, here’s what you can do. Mathur said that it’s important to keep the initial communication short and to the point, much like an elevator pitch highlighting there's a huge market demand for your product or service offering, and do not forget to include the call to action. “More often than not the investor is more interested in the action than the idea,” he said.
He added that an entrepreneur should never forget that investors are as eager to meet them as they are. “And just like you, they are time-starved and are not interested in an opportunity that does not yield any result,” he said.
Garg too agrees with him to say that time is crucial for investor meetings. It is imperative to keep a good time-check. “While it is good to follow-up, overdoing it can prove to be detrimental. Patience and persistence in the right amount and time go a long way,” said Garg.
Here are few ways that Mathur advises will help make your business idea sell:
- Make more human connections through effective networking. Start-ups need to start networking much before they need funding, so that there is enough time to build visibility
- Demonstrating that that the product is already gaining significant traction and is growing over a sustained period of time is important. This is a huge plus point when it comes to pitching to investors
- During many networking conversations and pitches, it is likely that you will receive a lot of criticism and feedback. It is important to take those positively
- Do not come across as defensive in the face of feedback being offered by an investor. It is often the worst thing a start-up can do