How (not) to Approach Investors
“I have an idea I’ve been working on for a few months… I’ll be happy to present it to you and understand how we can move forward”. Nothing about the team, product or funding requirements; no presentation or 1-pager attached. A total of 134 people, myself included, received this email. My guess is that none replied.
Most founders say that raising funding is their biggest challenge. If this is the case, why don’t they put some effort into approaching investors professionally?
Those 134 recipients include most of the active seed investors in Israel, and approaching them in such an unprofessional manner leaves very few funding options. Each of them receives hundreds of investment proposals a year but can seriously evaluate 10% of less, in order to actually invest in a select few.
The first rule of approaching investors, for those who haven’t figured it out yet, is to be careful and selective. Never send bulk messages; learn about investors’ interests and preferences, and approach relevant ones with a personal message.
Determining who is relevant is usually straightforward: just look at the investor’s website, Linkedin or Finder.
You will want to approach investors active in your field and investment stage. Trying to start a relationship with later stage investors is also a good idea (they just might make an intro to a more relevant investor).
The email message (you can find numerous examples online) must be brief, while including the essentials: who the founders are, what it is you are doing, the stage you are at and what type of funding you are looking for. Something captivating that will make you stand out in the crowd could also help. And yes, you must tell what it is you are doing even if it's confidential. Don’t forget to attach a short slide deck (save the full one for the face to face presentation) or 1-pager. If you don’t hear back after a week or so, do send a reminder.
What about intros? There are different views here, and mine is that a well written cold email to a relevant investor should work without one. A recommendation coming from someone the investor knows and trusts is obviously better, but an intro from some shared Linkedin contact who does not know you or the investor well is not necessarily better than a cold approach.
Fundraising is frustrating and even humiliating sometimes. Almost all founders hear dozens of negative answers before finally hearing yes. But a negative answer is an important learning opportunity. Ask why, and then give what you've heard some thought. It might help you do a better job next time.