Welcome to a BetaKit weekly series designed to help startups and entrepreneurs. Each week, investors Roger Chabra and Katherine Hague tackle the tough questions facing founders today. Have a question you would like answered? Tweet them with the #askaninvestor hashtag, or email them here.
Thankfully, investors (especially VCs) are much more accessible and approachable these days than ever before. Good VCs know that being accessible is key to getting the chance to work with the best founders. Many of today’s greatest stalwart technology companies (Facebook, Snap, Apple, etc.) were built by first-time founders with little business experience. Ignore these first-time founders at your own peril, I’d say. You never know where the next breakout story is going to come from.
You want to build a relationship with an investor? Approach it the same way you would building a relationship with a potential customer or a key potential employee.
Cold-calling probably won’t work. A blind LinkedIn invite will definitely not work. However, going up to them at an industry conference or networking event just might. Most VCs, like myself, are drawn to aggressive founders, people who can charge through walls to get what they want and get to who they need in order to make their company a success. Especially if these founders have the real goods to back up their bravado.
Cornering an investor in the bathroom aside, there are some tips you can use to increase your chances of getting airtime with an investor and building a long-term relationship.
The most important thing to keep in mind when building a relationship is to play long ball. Take the time to build a relationship way before you actually need something.
Always, always, always get a warm introduction to said investor. What I mean by “warm” is getting introduced by someone who is a trusted connection of theirs. This could be a current (or former) portfolio company CEO the investor has funded, an advisor to their firm, or another partner at their firm. This will immediately vault you in their eyes. You will be seen as a respected connection of the person making the introduction. The best VCs know their value-add is only as good as their network, and they seek to nurture and build it out constantly. They will welcome a chance to get to know you.
Many founders I know had the best results from their fundraising process by asking people who were already committed to investing in the round to introduce them to other people in their network who might be interested. They did this only once the person introducing had made a commitment with their wallet, though. This changes the dynamic of the introduction exponentially in your favour.
Once you are in the door, make sure you have done your research on the person you want to build the relationship with. Google is your friend. LinkedIn is your friend. Their Twitter feed is your friend. Their firm’s About Us section is your friend. Learn all you can about your target. Look for business “hot buttons” that relate to you and your company, but also look for personal hot buttons. Despite how they may be perceived or portrayed, VCs are humans too. We are all subject to our own preferences and biases. We want to like people who are like us or who take an interest in us. Use both professional and personal interests information to your advantage.
Once you establish rapport, nothing will gain an investor’s attention more than you crushing it with your company.
Once you establish a rapport with an investor, nothing will gain their attention more than you crushing it with your company. If they see and hear that you are performing well, your job of getting them to engage with you further will be very easy. Trust me. Perform well, and don’t be shy about updating potential investors about your progress. Ask them if you can subscribe them to your monthly investor/advisor newsletter or email update. Update them over a quick coffee meeting.
The most important thing to keep in mind when building a relationship is to play long ball. This means you need to take the time to build a relationship way before you actually need something from a potential investor, whether that be money or an intro to one of their valuable contacts. Ask for their advice, get them admiring your progress, get them emotionally invested in your company long before they financially invest or invest with their network.
Play the odds in your favour. Build out relationships with a number of potential investors, not just one or two. This way, you’ll be able to decide who you want to have invest in your company. Your choice will be easier because you’ll have a history of working with and evaluating said investor.
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