How To Approach Investors
1. Build bridges with investors before you may need to cross them, ie. Don’t go to them when you need the money. There are a multitude of angles to use, but each angle has to come from a core place of self-less and selfish interest. Know what they want and need, know what you want and need. Each angle will also dictate how early you can / should get on their radar.
2. If you are introducing your startup to them, then around 6 months. If your angle is to aid startups in their portfolio, introduce startups to them (filter them, don’t send them any and all), or introduce family offices looking to put funds into a pool; then you can contact them a lot earlier.
3. There is another way that you can connect with investors, “get an intro to us via someone in our network”. With some investors this will be the only way.
4. Note the investor landscape, find out their investment thesis. See if their portfolio has any that could be competitors, any synergies, etc.
5. Find out the required milestones (for your current stage and the next one). This can be a difficult one to find out, for it can pin some of them down a bit too much, especially when they take so many other things into consideration. If they don’t mention it on their site, and there is nothing in Crunchbase et al, you’ll have to ask them down the line.
6. Find out more about the appropriate partner at the VC firm whom is involved in your niche. If you can’t find the appropriate partner, aim for the top, and have them point you in the right direction.
7. Acquire information about the partner and use it to formulate an email that is about them. I will typically provide a few of my thoughts on something they said in an article. They will be genuine thoughts. No brown-nosing, no compliments for the sake of it, etc, etc.
8. Find out the firms current position in the fund life-cycle: are they open to new investments, only open to portfolio synergies, only follow-on funds left, etc.
9. If the investor’s portfolio has competitors and/or synergies find out where they stand on this. Some will be open to funding competitors, some won’t. If so, find out how things are kept ethical and above board.
10. Find out what their investment approval process is; stages, duration, etc.
11. Ask them for their due diligence (DD) checklist, and work on that organically. Until then, use this one: https://seraf-investor.com/compass/article/seraf-toolbox-due-diligence-checklist
12. DD goes both ways, so find out what you can about them, what they are like after investment.
13. Prepare a presentation deck, not a pitch deck, and present it to your team. Let your team know beforehand, and to attempt to trap and flummox you as you walk them through it.
14. Update the deck and send it to a few of the investors, and use them as data points. The reason it’s not a pitch deck is because the deck should explicitly state that you’re not looking for funding at this moment in time.
15. Send it to ones you either have good relations with, and ones that do not fund in your geographical area. There are some gems out there who will go out of their way to aid you and to give you feedback. Granted they may not know the launch country market, but they will know the startup niche. Basically work your way inwards to the set of investors you are targeting, using the feedback to hone and refine startup / deck.
16. If you don’t want to slice by geography, or want to start closer to home, slice the investors into tiers. Can be based on many things, niche relevancy, track record, connections, dumb or smart money, etc. Work your inwards from the ones you least want.
17. Once you get to the set of investors you are interested in, same thing, not looking for funding yet. If it’s a decent startup / deck you could be asked to come in for a chat, or to keep them updated as to your progress.
18. If you are going to go down the path of external funding, then investor pre-validation is vital.
19. Keep them informed as to your progress, monthly update is fine. Keep it short and to the point. Be brutally honest, so good and bad, hits and misses.
20. Even if your angle of approach is for your own startup, keep an eye out for any startups that you think they would be interested in. Same thing with investors and family offices, some of them go solo (or dedicated fund manager), some want to put their funds into a pool.
21. When you are ready, send the pitch deck.
One last thing, no one ever got funded off a pitch deck. Napkin maybe. but not a deck. It’s a foot in the door at best. Besides, founder(s) of an early stage startup, they’re investing in you.
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