Every entrepreneur dreams of success. To achieve success, sometimes it is necessary to find investors. Sure, you can reach out to your friends and family. They know you, and because they know and trust you, some will feel comfortable investing in your dream. But how do you capture and hold the attention of investors who know nothing about you? You need to be visible, and you need to capture their attention instantly.
Indirect Communications — Make Yourself Visible
Now, in the digital age, investors will want to find out all they can about you before they respond to any inquiry you may send them. If you are nowhere to be found on the internet, the chance of grabbing the attention of others is still possible, but greatly reduced.
The social media target is huge — literally everyone with access to the internet — and may extend into territory you never dreamed of reaching. Be sure you present yourself in the best possible light, professionally and authentically. (Plagiarism or misrepresentation may come back and bite you in the butt, so be careful.*)
Social Media Platforms:
Instagram: Right now, early 2020, Instagram seems to be the social medium of choice for businesses. In the future, this preference may change, so keep aware of trends.
LinkedIn: One of the first things a potential investor might do is look to see if you have a LinkedIn profile. Basic profiles are free, as of this writing. Take advantage of that fact. In some business arenas, if you don’t have a LinkedIn profile, you might as well not exist. Seriously. A paid LinkedIn account offers some perks you might want to take advantage of.
Facebook: If your business deals with the general public, a Facebook account is a good idea. If your business is more specialized, you might not need one. Look to see if competitors in your area have accounts, and be guided by what you find.
Gust: Gust.com is a startup network. If your business has achieved some maturity, check it out.
AngelList: AngelList is another good networking site for businesses that have achieved some maturity.
A business website is extremely useful, even if it contains only a splash page with your basic information on it. A website helps establish your credibility as an authentic player in your field. Creating a business website is easier than ever, as many internet providers offer easy-to-use tools that help you build a sophisticated site. It is not necessary for you to hire a professional web designer unless you have complex needs.
DropBox and Google Docs are examples of data rooms, which are simply repositories of written materials. You can provide invitation-only links to trusted individuals so that they can access specific documents. Data rooms may require accounts, but if you don’t have high usage or storage needs, the accounts may be free.
* Caveat: If you quote someone, give them credit. If you list some as an advisor, get their written permission. Only post genuine business references, again with written permission. If you are not sure about a fact, leave it out. BE HONEST. Honesty and integrity are everything in the world of investors. If word gets out that you can’t be trusted, sooner or later you’ll be toast.
Direct Communications — Grab Their Attention
In Part 1 of this blog, we talked about indirect communication, via social media. In Part 2, we will take a look at effective direct communications.
Direct communications have a narrow and direct target. They are not one-size-fits-all information blasts, but are, instead, carefully crafted to grab the attention of specific individuals.
A: Personal Introductions:
A personal introduction may take place face-to-face, or via an email. Here is an example of an actual introductory email, with personal information altered to preserve confidentiality:
Subject: Introduction, Joe Blow and Evolution Accelerator
Good afternoon Joe and Alex,
Per our prior conversations, I’d like to introduce you both.
As mentioned during our conversation, Alex Chompff is the founder of Evolution Accelerator here in the Sacramento area. Evolution works with a variety of startup and growing firms in a number of capacities, including raising capital.
Joe (part of the executive team) and Sally (the owner) run a well-established, successful (specific field) company, XYZ Inc. They are considering options related to partial financing of their acquisition of (related company). They look forward to speaking with you about their endeavor in the near future.
B: Elevator Pitches:
Have a 30-second pitch ready to deliver verbally, just in case you find yourself in an elevator with Bill Gates and Warren Buffet. You want to convince them that you are investable before they get off the elevator on the 5th floor. Here’s an example, showing both good and bad pitches.
C: Investor Summary (1-2 pages max)
Highlight the key items that would excite the investor the most:
Unfair advantages (IP & Patents)
You can find examples of investor summaries online — choose the format that best suits your particular needs.
D: Pitch Decks (aka PowerPoint presentations)
Tailor your pitch decks to your specific audience. One size does not fit all. For an example, a pitch deck for an angel group will be different than a pitch deck for venture capitalists. Search the internet for pitch decks, and model yours after the ones that seem most effective.
PRO TIP: Plan ahead for follow-up questions with financial projections, market analyses, team bios.
PRO TIP: Do not attach PowerPoint presentations to emails — convert them to pdf format.
E. Person to Person Emails:
Emails should grab the investors’ attention when you don’t have a personal connection. The subject line is crucial, so make it clever and NOT MUNDANE! (No more than six words, though.) Humor (if you have that skill) is a great tool. If you can make someone chuckle you stand a better chance that they will open it. Remember, investors see dozens of these emails a week. Stand out from the crowd. Give them a reason to take an interest. Keep in mind that every startup is going to claim they are solving a killer problem, and most of them aren’t.
Here is a good example letter provided by a nice guy we know:
I hope you’re having a great week.
I know that Moola Capital has invested in Similar Company so I wanted to show you our early traction as a Sacramento-based startup.
My name is Jennifer, and I’m a co-founder at Wiggly Startup – a (specific kind of business) with nice traction:
From 0 to 2 mln unique visitors in 18 months;
+$220k monthly revenue (broke even one year ago);
CAC in Adwords is $6, and our LTV is $12, and our sales cycle is < 2 days;
Nov 2016 to Nov 2017, [STARTUP]’s revenue has been growing at 22% MoM.
With so much detailed user data, we plan to get into (specific future endeavors). I’d love to tell you more.
Do you mind if I send you a 1-pager or a short deck?
PRO TIP: You should have done research on the person professionally and personally to see what they invest in, what investments have paid off, and what they are personally into.
Remember, effective communications are the key to everything. If you are having trouble with a lack of response to your communication efforts, Evolution Accelerator is here to help you grow and prosper.