So, it’s safe to say that don’t hesitate to reference check potential VCs. As an entrepreneur it is as important to you to choose the right investor as it for an investor to choose the right business to fund.
A lot of people will tell you that cold pitching is not the best way of getting to a VC. The best way to engage with VC is by getting a warm introduction within someone from your network. An introduction from an existing known company is a strong signal for a VC. Your known contact will also tell you the quality of the investor. VCs receive 1000s of email on a daily basis. They only reply to a few emails of people they already know. They don’t open emails from people they don’t know. The investor wont trust you if he doesn’t know much about you. The category of the person who will introduce you to the VC is not so as important as the nature of his relationship with the investor. The best introduction is through people with good personal equation with the investor. To make an introduction with the investor there are a few steps which you can keep in mind:
1. Make a list of VCs / Investors you would like to be introduced.
2. Go to linked in, read about the background of the investor. Is he the right partner you are looking for? Check your shared connections. This is the starting point. Then you can look at the shared connection and judge the nature of the relationship with the VC.
3. Selecting the right shared connection, now approach them individually to get yourself introduced.
In this way you can get a warm introduction to the VC. If you fail to establish any common contact between you and the VC then you have to look for other ways/platform where you can approach VCs.
1. Pitching Events: Make sure you turn up at major pitching events for networking. Get introduced to investors and make the right connections
2. Crowd funding sites: Crowd funding sites will give you access to different types of investors – from general public to philanthropist to known investors seeking to fund new ideas.
3. Online lending platforms: You can go for online lending platforms like peer to peer, nontraditional lending sources or even large investors looking to fund small businesses.
4. Accelerators: Mostly for beta stage startups, premium accelerator programs offer introductory mentor relationships that provide entrepreneurs the time to develop investor connections and demonstrate their potential before funding.
If nothing works for you cold pitching should be the last resort to reach out to investors. If you do a cold-call pitch to a Venture Capital (VC) investor using email, your proposal is already at the bottom of the pile. Your real funding request can also be classified as spam. However if you do cold pitching please find the list of 10 things which you should avoid and VCs absolutely hate:
1. Lengthy emails/pitches: VCs receive a lot of pitches and hence you should keep it as short as possible
2. Lack of numbers: Numbers are crucial for any fund raising activity and should always be reflected in your email pitch.
3. Too many attached files: For your pitch email avoid attaching unnecessary files and send only your pitch deck.
4. Don’t mention NDA: Mentioning NDA might rub the investor in the wrong way in the first place.
5. Spelling and Grammatical errors: Avoid any spelling and grammatical errors in your pitch email.
6. Pitch through social networking site: Many VCs are influencers and thought leaders on social media sites. Never sent your pitch through networking sites like Linked, twitter etc. as it is unprofessional and unacceptable.
It requires a lot of skill to write a cold email effectively. Most people have no clue how to format an email to get a response. If you can learn how to write a great cold email, you’ve put yourself far ahead of the competition. For start-ups, emails are a powerful tool that can help get funding. Creativity and persistence are the key elements of cold pitching. Every email has to be individualistic and personal and have to stand out on its own. Try to anticipate the questions the investor might have in mind and incorporate the answers briefly in your email. You don’t have to shout from the rooftops how special you are and how brilliant your idea is! You just need to be relaxed, professional and unique.
Money should not be your sole aim while cold pitching. That’s not going to happen, at least not through one email. The aim is to make an impression and feel like that you have thoroughly done your homework in choosing them and not randomly looked for funding. Most importantly they should be excited about your business idea. Here are a few tips on cold-emailing investors: