Fundraising · Investor relationships

I'm fortunate to have a great network. How do I email asking for investment w/out sounding rude?

Laura I. Gómez

April 30th, 2015

I've tried to be direct, then went for the "ask for advice" route and now I am in the "need your help" stage. What is the best option that worked for you?
More than 65% of new companies fail because they lack funding. In this course, you’ll learn common fundraising mistakes, how to nail an elevator pitch, how to craft a killer pitch deck, where to source investments from, and all about term sheets and convertible notes.

Michael Brill Technology startup exec focused on AI-driven products

April 30th, 2015

I think @Julien nailed it. Pretend like you've been taken hostage. When they find out you weren't, they'll be a bit pissed but by then you'll have made them tons of money and all will be forgiven. And you don't even have to waste your money buying them coffee.

Julien Fruchier Founder at Republic of Change

April 30th, 2015

Asking your acquaintances for something like investment funds over email is a big no no. Would you like to get that email? How would you respond? "Asking for advice" and "I need your help"? That's not being direct or forthcoming. You're losing trust and credibility before you even start. 

People generally don't like being asked for money. If you're bootstrapping and need funds from friends and family, start with family first then your closest friends and then, only then, reach out to people outside of that circle. 

Your family will (or should) invest in you because they love you and believe in you. They probably won't care very much about your business plan or idea. Once they're on board, your friends will invest (likely in smaller amounts) for the same reason as your family but they'll want to know that your family is supporting you first. If they're not, it doesn't breed confidence. Lastly, acquaintances should be pitched on "what's in it for me" basis (in other words, how much money are you going to make me and how) and you should start your pitch with "my family and friends have already backed me with $X and now I need $Y to do Z".

And for the love of God, schedule a meeting over coffee. And make sure you pay. Unless you've been taken hostage and you're emailing to ask someone to wire funds for your release, don't ask for money over email. It's just rude. 

Rick Nguyen Cofounder @ Spot Trender

April 30th, 2015

Hi Laura,

Direct phone calls to set up meeting in person worked best for us.

When we raised our $200K seed round, we called people we know directly and set up a meeting, specifically to ask for investment. Some ideas that helped us:

-Qualify your potential investors. Make sure they have money to invest RIGHT NOW (not in stocks, or stuck in other investments) and are looking to invest in startups. This will save you a lot of time, rejection, and grief. You can qualify for this during your call to set up the meeting.
- Do you homework on the investor. Look at their past deals, what company they invested in, how much, and how often. You can probably see their investment patterns and structure your pitch to fit it.
-Don't beat around the bush and set up a meeting to ask for "advice" then ask for money. Investors respect boldness.

At the end of the day, after all said and done, the most important factor to successful fund raising is traction. :)

Nick LaFond Investor | Entrepreneur | Startup Advisor

May 1st, 2015

I don't know enough about the request to give a proper answer here. 

If it's a crowdfunding campaign, totally OK by email.
If it's a family/friends investment in your business this should really be done in person. The right way to do this (and most effective from my experience):
  1. Call/email and ask for an in-person meeting. State you could really use their advice on a big life change.
  2. Show up slightly early to the meeting bearing their fav treat (coffee / donut / veggie tray)
  3. Have 5 or 6 honest questions prepared to ask them about their experience.
  4. Ask, listen, and take notes. 
  5. Tell them what you're doing.
  6. Ask if they would feel good about paying it forward. (another one I like is being one of my angels.)
  7. Pull out the promissory note you have prepared and show it to them.
  8. Let them know how much you're asking for and what the terms are.
  9. Ask (directly) if now is a good fit for them to help you launch [XYZ].
  10. If they say NO, thank them for their advice. Let them know how much it helped you out.
  11. Tell them the next time you guys meet it won't be awkward at all -- simply wasn't the right time for them and that's OK.
  12. Leave with a smile. You're one NO closer to getting a YES.

Michael Brill Technology startup exec focused on AI-driven products

April 30th, 2015

You were already direct and asked them for money and they said no.
Then you asked for advice and they gave you advice. 
Now you want to go back and ask them for money again.

Why did they say no in the first place?
Did you take their advice?
Have you accomplished material goals since they originally said no?

Robert Anderson Founder / Principal Engineer at Shifty Logic

April 30th, 2015

My advice with respect to fundraising is that you should be nurturing those relationships long before you actually need the money. Then, asking for money becomes a lot easier. Along the way of building those relationships, you are teaching them what type of a person you are and how great your products / ideas are. If all that falls into place, you may not even have to ask them. However, if you have to, the conversation is easy since they will already know if they align and if not, assuming they like you, will help you find someone who does align.

--
Robert

Dwayne Johnson Social Alchemist - I build equitable, prosperous, sustainable smart cities and regions.

May 1st, 2015

Great advice here. I'll add a few more points.
Have your "elevator pitch" ready. Don't wing it. I like a four step format that hits the basics.
 1 - The intro ... brief connector showing you've done your homework and why you're talking to them
 2 - The set-up ... your project including why they should care about it
 3 - The ask ... what you need/want
 4 - The exit ... always thank them for their time

If you know them well, get some honest feedback. Be careful who you ask; you might trigger a dunderhead alert.

Make notes for each pitch to learn what is working and what doesn't. Try and have some fun with it. I like creating categories and keeping score. Some categories are:
1 - No money
2 - Didn't get the concept
3 - Not their investment area
4 - Herd investor (will invest if someone they know or important invests)
5 - Dunderhead*

A dunderhead is a self absorbed blowhard more interested in the sound of his/her own voice than valuable advice. Escape without being rude.



John Seiffer Business Advisor to growing companies

April 30th, 2015

I assume you know that people won't send a check based solely on an email. But if your emails were appropriate and you've asked for advice, and asked for help, and asked for meetings to raise funds and you're not getting anywhere, then maybe it's you not them. 

Even investors who don't know you are lousy at saying no. They'll say "not at this time" or "get back to me when you've done xyz" or "it's not what I'm looking for right now but let's stay in touch" when they mean NO. People in your network are probably worse at saying no. 

But if you're not getting any traction, from lots of people, there's got to be a reason.

By the way, not getting investment is not the end of the world. Most companies get started without investment. In the last 50 years, half the IPOs did it without venture money. 

Moh'd Jebrini CTO at Mashvisor

May 1st, 2015

Every case is unique, In our case we have built multiple relations with seed investors/VC and we started our relation with them 6 months before asking any one for money. 

In 6 months we have been able to test our assumptions and we came with valid arguments to share with investors, we have wrote an email, attached our documents and sent it out to 10+ investors .. 

We did presentations to them all after that, 2 week later we have secured our first round > $370K ... 

Again, every case is unique... but it all about what value your startup are bringing to the surface!

Good luck! 

Ming Tsui

May 3rd, 2015

Never give up asking.