Building Your Own AngelList: 4 Expert Tips on How to Network to Find Investors for Your New Business
Investors aren't in short supply, but the investment opportunity that fits you is harder to come by. Make sure you're in the right spaces and talking to the right people.
Having a brilliant product, team, and business model are important starting points in your entrepreneurial journey; but at some point, you'll need to start raising funds to take the next step. Getting in front of the right investors requires time—perhaps more than you thought—and a dedicated search for the right backer.
Investors aren't in short supply, but the investment opportunity that fits you is harder to come by. So, you need to make sure you're in the right spaces and talking to the right people. Here are some fundamental steps to prime you and your company for that golden meeting, with tips from investors themselves.
Look in the right places.
There are plenty of digital tools to find and contact investors in minutes. AngelList is the biggest and most popular, and is where most accredited investors from the U.S. and around the world can be reached. Investors on the platform can be filtered by location, number of investments, industry, and more. Thefunded.com is another great resource where entrepreneurs leave reviews about funding rounds and investors, and discuss growth strategies. The platform also hosts regular virtual events where founders can meet potential investors.
Gabe Zichermann, chief executive of Failosophy, says that an often-overlooked tool is your local government agency responsible for economic development: "These agencies can give you information about debt financing, equity financing, and even offer programs about securing investment."
When you first strike up a conversation with investors, make sure you're talking to the right person. You'll save yourself a lot of time and effort if you can immediately figure out if someone is an appropriate match for your business. Pay attention to people who are investing at your stage, in your company size, and in your industry or type of mission. But also ask yourself if they fit into your vision for the future of the company. Do they aim to grow their companies long term, or do they only back enterprises with a swift exit strategy?
Considering these factors will confirm whether or not it's worthwhile to go ahead and pitch to the interested party. If you're unsure or unable to know if an investor aligns with your startup in these ways, ask people who are familiar with them, or send the investor a simple message saying: 'my company X, does Y and Z - do you invest in this?'
Leverage 'warm introductions' as often as possible.
If you're new to the startup sphere and don't have immediate investor contacts, focus on being referred through mutual friends or associates. Even if you are well-versed in your industry, referrals are a particularly effective form of networking. Naturally, you need to be sure that the person recommending you is credible, so ask yourself if you would take advice from them normally, or if you would involve them in your business.
When you're sure someone is a good middleman, be specific about how you'd like to be presented to the potential investor. State what your company does, how much you're looking to raise, and what your business goals are. Investors are inundated with cold pitches, so being direct is best, while your mutual connection should advocate for you. The warmer the first touchpoint, the warmer your relationship will be—investors are ultimately always looking for validation for a potential portfolio company.
Eamonn Carey, managing director at Techstars London and partner at The Fund, recommends being specific when asking a contact for a referral, and showing them you've done your homework. In explaining why you want to be put in touch with a certain investor, give your contact a concrete reason; Carey suggests the following example: 'I want to connect with X because I loved the article they wrote about X recently.' This detail shows that you're active in your sphere and won't waste your connection's (or the investor's) time.
To listen in to Gabe Zichermann and Eamonn Carey discuss how to network for investors sign up for a risk-free trial of the SYOB course and check out our live webinar on 09//30 at 3pm ET
As a side note, be cautious not to pay or enter a deal with the people connecting you to investors. The recommendation should be genuine and organic—if they're asking for money or equity, that's a red flag that the contact has ulterior motives.
Utilize the mediums that are best suited to your personality.
In the past, networking with investors was an in-person only affair. Nowadays, the vast selection of digital tools means it's faster, cheaper, and more far-reaching to use technology. That said, how you network should coordinate with your personality.
If you're an extrovert and perform best in face-to-face scenarios, book yourself a place at conferences, hackathons, business schools, and community events.
If you're more introverted and still finding your feet in the fundraising game, don't be afraid to suggest video or phone calls instead for investor meetings. These platforms give you more control and flexibility, and given the current lockdown restrictions, they won't seem like an usual request. Carey notes that "the biggest change we've seen in the last six months is the extent to which people are comfortable making investments after meeting founders on Zoom."
A huge plus with virtual meetings is that you can get in front of investors early. Even if you're not planning to host funding rounds yet, you can give them a timeline for when you will start, and express that you want them to have a preview because they're such a great fit. Every investor likes to feel that they have had exclusive access to a new venture.
Keep in mind, however, that the virtual dimension risks making encounters less interpersonal, while investors still consider meeting your team to be of vital importance. So don't go into pitches alone, bring a co-founder or relevant executive into the videoconferencing room too.
Online tools can also soften the blow if the investor isn't interested. You won't have spent as much money and time as you would have in person, and you can quickly bounce back and into another opportunity. Zichermann recommends asking the investor to point you in the direction of someone else who would be excited about your pitch; their network is arguably the most valuable, so catching them while within reach of their rolodex is a smart move.
Tidy and update your online presence.
You and your business are under the spotlight even while you're networking. Investors are likely to review your website, social media, and company profiles to check that you're worth their time. In turn, you need to make sure that your online presence is professional and shows you're regularly involved in relevant discussions in your niche. You should also be present on all the platforms your company would be expected to be seen on, including niche industry social media sites and forums.
Devote some time to organizing all your content, including filtering through any historical content that is no longer representative of your company. Make sure your style and formatting are clean and that you're replying to any customer interactions. Standardize your brand and your messaging across all the platforms you use. Think of your online presence as an extension of your resume—you want to showcase any wins you've had and prove you're better than your competitors. Don't forget your personal accounts, you should be maximizing your company exposure as much as possible, making a conscious effort to always talk about your startup.
As with any type of networking, the more visibility you have, the better your chances of reaching the right person. Even if one meeting doesn't appear to be particularly meaningful, that person could remember you down the line and facilitate a good match. In the meantime, harness all the tools at your disposal and make your company your number one conversation topic.
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