Fundraising

Approaching angel investors - cold outreach vs. soft warm intros?

Brian Bensch Founder & CEO at Snow Schoolers

July 21st, 2016

What are folks' perspectives on the best way to approach investors (that aren't already in your personal network or within 1 degree of separation)?

Option #1 -- pure cold outreach via email. Find their contact info online, email them a very brief, to the point description of your company and ask (advice, investment, etc., NOT a coffee/call), as Michael Siebal at YC suggests (source).

Option #2 - track down the contact info of one of the founders your target investor has in their portfolio, reach out to them cold, ask about their experience with so and so as an investor, and ask them to make the email intro.

Thanks all! Relatedly, I'm starting to gear up to raise an angel/seed round in the ski technology space. Open to all suggestions of trees worth barking up, and DM me if you want to hear more about the project.

ajay rajani Entrepreneur & investor. Aspiring merchant of progress.

July 21st, 2016

I'm a pretty active seed investor. Cold ONLY works if it's done with a high level of specificity / matching (I.e. if an investor has invested in tangential companies or better yet blogged/tweeted about their interest in XYZ problem/market/etc). 

For anything but that level of investor-market/problem fit, worth the time to find/get a warm intro.

Hope that helps!

Joy Passey Entrepreneur Coach; Speaker; Multi-Talented Creator; Dive Master

July 21st, 2016

I just got back from the NY Venture Summit. The main thing investors said when emailing them: they want to know why you chose THEM. Doing a mass email to 100 investors turns them off. Do your homework about each investor to make sure you are the right fit for them. Why do you want them specifically to invest in you? Also, know what you need, besides just money. What else do you think that investor can bring to you? They talked a lot about having a personal relationship with the people/companies they invest in. They're not someone who just gives money, but you're building a relationship with them. Hope this helps!

Anonymous

July 22nd, 2016

To underline Joy's point, the modus operandi has to be to stop being so passionate about your company just for a second and think about the investor first: How can you either disrupt the flow of his/her day (in terms of sheer impact of message), or how can you charm them into some form of 1-2-1 dialogue through something a little more empathetic (probably about them?)

I was at an event  recently where a sophisticated angel investor summed up the process neatly by stating that he spends the whole time with proposals getting to reasons NOT to invest in projects as efficiently as possible! Your e-mail header is likely to be the first gateway... ;o)

Finally, another hard-learned tip: You are not selling your product (even if it IS the next Facebook etc. etc.), you're selling an investment. These guys are looking for the the 1 in 10 that will actually deliver a return, letalone transform into the next Unicorn. The smart ones are real pragmatists.

Martin Omansky Independent Venture Capital & Private Equity Professional

July 22nd, 2016

I represent angel investors, and so I have some perspective. The bottom line is that the project's fundamentals govern. We get referrals from investment banks, lawyers, former clients, etc. and cold calls, Internet inquiries - all sorts of sources. I can only speak about our groups, but I am pretty confident that the rational approach to evaluating a deal is to invite all comers, look at their proposals, and put aside how the deal arrived. One more thing: there are so few risk investors and such a great demand for risk capital that no one should exclude any possibilities. Sent from my iPhone

Joy Passey Entrepreneur Coach; Speaker; Multi-Talented Creator; Dive Master

July 22nd, 2016

And remember when networking, be nice and helpful to EVERYONE. Don't let looks and title deceive you. You never know who people are and who they know. Plus, it's just courteous to be kind to everyone. No one wants to work with a jerk.

Joseph Wang Chief Science Officer at Bitquant Research Laboratories

July 22nd, 2016

Warm intros work better than cold calling. Even better is if you can get to a meetup where you can talk with dozens of angels at the same time.

The problem with cold calling is that you have to kiss a *lot* of frogs to find a prince. For example, if you cold e-mail me and you are looking for USD 100k to fund a fashion industry play, then I can't help directly you since I don't know anything about the fashion industry. At that point you need to contact a lot of people to get a usable lead, and you probably don't have time to run a call center.

BTW.  What I'm looking for are successful startups that are interested in expanding into Asia and using Hong Kong as a base of operations.  If you are interested in that, I can help you find funding for this.



Gary Ross President | CEO | Founder

July 25th, 2016

Brian,
I recommend you only use warm intros and do your homework before contacting.  View it as a very, very important networking call. Also, you need to be careful contacting people 'in mass' if you are not accredited investor.  
Let me know if I can help you.
Gary

Ken Steinberg Innovator and Serial Market Disrupter

July 21st, 2016

I too am an angel....warm. 

Nathan Beckord

July 22nd, 2016

I've seen anecdotal data on this from users on our investor CRM platform, and the warm intros are roughly 10x more effective at leading to a meeting / call. 

If you're reasonably well-networked, you can typically find a 1st or 2nd degree connection (using LinkedIn etc) 80-90% of the time...for the remaining 10-20% as others suggest, a specific highly targeted / researched cold email will *occasionally* lead to a response. For "popular" or well-known investors, the response rate from cold drops to almost 0, however.  

Logan Kleier

July 22nd, 2016

My experience is that you need warm intros. Part of the process is that they want to see if that you're willing to put in the work to get a warm intro. It shows persistence and they get approached by so many people for money that they want a quality filter applied before talking with anyone. Also, I've found it's virtually impossible and more than a little overboard to approach any of them directly for money. Instead, if you meet with any, talk about your business idea, target market and things you need help with (funding or finding channel partner advisors, etc.) and ask them if they have any suggestions. If you ask them about funding, I found that it's best to guide the conversation and not just say "Who should I talk with about getting funded?" Instead, questions like "Since we're in the outdoor equipment industry, my understanding is that we'd be best suited towards approaching groups like XYZ for funding b/c they've funded company ABC that's kind of like us. Is that correct? Or do you see things a bit differently?"