Investor Outreach

Up until now you’ve motored through the preparation for speaking to investors. Now let’s actually talk to some! In this Phase we’re going to focus completely around how to find inroads to the investor prospects you reached out to and how to develop the perfect email to send to setup your meeting.

Specifically we’ll cover the following topics:

Short of walking you into your pitch meeting and giving the pitch for you (that costs extra!) we want to arm you with as much insight as to both the process and best practices so that you feel confident in your approach.

Some of these exercises will feel a bit obvious but a few will likely strike you as “Wow that sounds obvious now that you put it that way!” None of this is rocket science – but most Founders make the same mistakes that we’re trying to help you avoid, so please take some time to digest all of this so you can be as buttoned up as possible when you make that big ask.

Preparing to pitch investors is about having all your pitch material at the ready for each phase of the pitch process. It’s important to note that the pitch process takes months, not weeks (in most cases) and can easily consume 3-6 months if things go well. It helps to understand the steps of the process so that you can begin to triangulate where you are in the pitch process and potentially how much further you have to go.

A quick version of how the process works is this –

As we’ll discuss later, these steps happen in a fairly linear fashion however you’ll likely repeat many of the steps over and over until you get an opportunity to move forward to the next important step.

Requirements: Elevator Pitch, Email Pitch Template

Once you've got your list of investors ready, the first step is to reach out to them with a very well-crafted email. Your introduction should include both your Elevator Pitch and all of the elements of the perfect Email Pitch Template.

The goal of the email introduction isn't to convince investors to write a check - it's to get them interested enough to want to learn more about you. You're hoping they will do a little homework on your company, and if they like what they see, they will ask you for more information on the company.

Later on in this section we’ll talk about how to find the best inroad to an investor to develop a warm introduction.

Investor is asking:

• How do I know this person? (personal connection to Founder)
• Do I understand the problem this company is solving?
• Do I care about the solution?
• Is this a big enough market for me to get a return on my investment?
• Does this sound credible enough to warrant more of my time?

Requirements: Linkedin Profile, Social Media

Depending on how you’re introduced (through a warm introduction or a cold email) an investor is going to want to know a bit about you personally. Ultimately, they want to know “is this person credible?” You can have an amazing idea but if you aren’t a credible Founder, their confidence that you can pull of the idea is fairly low.

Investors also realize there are lots of great ideas, but finding credible Founders is a harder search. Therefore you want to make sure what they do find about you is your best foot forward.

The most likely source of information is going to be your Linkedin profile since most people maintain this as a primary source of their business resume. Within the profile make sure you tweak your resume to highlight any experience you have that relates to this startup.

Beyond Linkedin, also consider what else shows up in a Google search for your name. Now might be a good time to make your Spring Break photos from college a bit more private. Also, if you have specific references that you’d like people to find, like a blog or Twitter account, do yourself a favor and point directly to those links in your outbound communications.

Last, if you have press that you’ve received that in any way either relates to this business or perhaps a meaningful past success, don’t be afraid to include that as well. That will help establish some 3^rd party validation that you’ve done something meaningful.

Investor is asking:

• Are the Founders credible? (establishing a baseline of trust)
• What have the Founders done that makes them capable of solving this problem (experience)
• What does their social media and personal Web presence say about them?
• Can I cross-reference their credibility with a 3^rd party source? (press)

Requirements: Company Website, Blog, Social Media

Whether or not you do business on the Web, having a Web presence today is like having a business card in the 80’s – it’s expected if you’re going to look professional. Your Web presence can be a single page web site, a blog, or even your social media account. It doesn’t have to be extensive, but it should at least look professional.

The investor is going to look to see if your product concept is well-communicated, if there is any demo they can see (anything from a clickable demo to some nice pictures or a video), and what if anything they can learn about the company’s traction (press, testimonials, customers). Don’t overlook the importance of having some sort of online presence to give investors a good sense that you “exist” outside of the pitch deck or email you shipped out to them.

As always, make sure there are multiple references to your web presence provided in all your communications and collateral. That includes your email signature, your pitch deck first/last slide, and the footer of your business plan or executive summary. By all means over communicate this.

Investor is asking:

• On first impression do I feel like this is the type of product I want to be associated with?
• Does the message they are conveying resonate with me as if I were a customer?
• Are people already buying? Do they like the product? (customer validation)
• Are other people talking about this company on social media? What are they saying?

Requirements: Executive Summary, Pitch Deck

If the investor likes what they see, they will request a slightly more detailed synopsis of your business. Investors don't parse through 50-page business plans to evaluate an idea. They look for a very tight, well thought out overview of each key area of the business in as few words as possible.

Depending on the investor's preference, they are either going to ask for an Executive Summary or a Pitch Deck. Both are the same information organized in a slightly different manner. They include references to your Team, Problem, Solution, Product, Market Size, Competition, Marketing Strategy, and Financing details, among other things.

In either case you'll want to make sure you're responding with that document the moment you're asked for it as investors lose interest by the minute. Waiting until after you get investor interest to write and review these documents is a really bad idea.

Remember that the investor asking for more information is considered a “buying signal”. Don’t just respond with the document. Take it a step further with some qualifying questions such as “Is there some particular part of the business that I can shed more light on?” That way instead of sending an entire document of a hundred potential answers you can expound on exactly what the investor really wants to know.

Investor is asking:

• Does this company even have more quality information? (you’d be surprised how many don’t have more than a basic pitch)
• There are some key questions I’ve got about this business that I’m hoping some additional documentation can cover.
• How is this startup positioned around key areas such as the team quality, customer acquisition strategy, or competitive space?
• What are the financial projections of this company and what assumptions are they using?

Requirements: Pitch Deck

Getting an investor meeting is a big deal. It doesn’t mean you’re a shoe-in for funding, but it means that compared to the dozens (hundreds?) of other startup pitches this investor has received, they chose to invest their most valuable asset – their time – to learn more about yours.

The investor can request either a call, video chat or in-person meeting depending on their schedule and logistics. These meetings will typically run from as little as 30 minutes to just over an hour, but rarely much longer than that for a first meeting.

Remember this meeting is selling two things – the value of your startup idea and the credibility of you (and your team) as Founders. This isn’t just about pouring through your pitch deck – you are auditioning and interviewing yourself in a very real way. Make sure you take note of that and try to establish some personal rapport with the investor so that they can see themselves working with you for the next 5-10 years.

On the startup side, you’re going to use the 10-12 slides of your pitch deck to start a conversation. The goal isn’t to make it to the final slide (so important!). The goal is to find out which slide the investor cares the most about and center the discussion around that point. They may already agree with your problem and solution but have serious reservations about whether you can scale customer acquisition. If that’s the case, that’s what you’re there to talk about.

Keep asking “What’s most important to you?” And make sure you’re steering the conversation about their needs, not what happens to be in your pitch deck. When you’re wrapping up, ask them “Where can we provide some more detail?” If they ask for more follow-up detail, that’s a good sign. If they don’t, that’s not necessarily a bad thing, it just means they aren’t immediately ready to move forward in most cases.

In some cases if the investor has partners they may request that you meet with the partners as well. Especially in the case venture capital firms, doing the “partner meeting” where you present to the whole partnership (who usually have to unanimously agree on a deal) is typical. So expect a few follow-up meetings if things are going well.

Investor is asking:

• Do I like and trust this person? (this is very important)
• Can I envision myself working with this team for the next 5-10 years?
• How are they answering my key questions? Do I believe their answers?
• Have they thought through everything? Am I punching way too many holes in this plan?
• Is this startup interesting enough for me to start investing serious time in?

Requirements: Full Business Plan, Financials, Cap Table

If the investor loves your pitch, they are going to ask for more detailed documents. This is a good thing. It means they are willing to start doing some diligence to see if all of those crazy claims you made in your presentation have merit!

The diligence items may vary, but in general they will consist of a full Business Plan that details things like your competitive position, your marketing strategy, and your product functionality. The request will certainly include your Financials, which will detail your use of proceeds as well as how you will make money in the future.

Lastly, you will likely be asked for your Cap Table, which is a summary of who owns what stock in the company. You usually won't be asked for that unless there is a slightly more complicated ownership structure that might include lots of people.

Investor is asking:

• How can I be as certain as possible this is a credible opportunity?
• Did I find any gaping holes when I dug in deeper on the company or the market?
• Do these financial projections hold up to some serious scrutiny?
• Are there any legal issues I should be aware of?
• Is this the type of company I’m ready to write a check with?

Requirements: Term Sheet

If your deal stands up to the scrutiny of diligence and a series of meetings, the next step is to come to terms on the financing itself. Individual angel investors may simply have a conversation with you about valuation, investment size and related terms. More sophisticated investors (firms) will usually send you their offer in the form a Term Sheet that is a short 2-3 page document that lays out all the major important terms of the deal. It’s much easier for two parties to first negotiate over a term sheet than to try to dig into a large legal document.

The challenge with the Term Sheet stage is that often what two parties think a fair deal looks like and what it really looks like once you write every term down aren’t the same. You may agree that the company has a $4 million valuation but you never discussed the fact that 5% of the company to pay future employee stock options would come out of your stock, not theirs (this is standard, and it’s generally annoying!)

This is where the dance of investor/startup negotiation begins, and it can generally last anywhere from a week to a couple months. It’s important to note that time is the enemy of all deals, and the longer this process takes, the more likely it is to blow up. It takes months to start dating but only one day to break up!

Investor is asking:

• Is this startup willing to offer me fair terms for my investment?
• What can I learn from how they respond to a negotiation about who these people are? (it’s like the first time a couple has a fight)
• Does the startup actually understand the terms of this deal? (many don’t)
• Do I feel good about where we landed on terms?
• Have I lost interest since this process began? (it happens)

Requirements: Financing Legal Documents

If you finally do agree on all the critical terms of your deal, the last step will be to move to a closing. What’s important here is to not assume the closing is a “done deal”. It’s not. It’s still more time that can transpire that an investor can back out. You want the closing to go as quickly as possible without overlooking any critical legal challenges.

This is where a good lawyer who has handled financings before can be a total game changer. An experienced lawyer will recognize all the terms that are “standard” in your stage of financing and those that are a bit out of bounds. You will rely heavily on this counsel, especially if you are a first time Founder raising money, so choose wisely. It may be great that your Uncle Jared is willing to do the work for 50% off, but this isn’t the time to save money. You want a very experienced lawyer who has substantial experience in specifically this type of legal work.

Even after you negotiate the Term Sheet there may be a handful of clauses within the long form of the financing documents that require additional negotiation. Remember that these are designed to be your “divorce papers” and generally center around what to do when things go wrong. As such, they feel egregious in certain areas. Don’t take offense, it’s just the way investors setup deals to protect against a worst case scenario. They aren’t trying to “take your company later” – they are trying to make sure you don’t take their money and throw it away!

The closing can take as little as a few weeks (unlikely) to as much as a few months (more likely) depending on the complexity and stage of your deal. Generally small amounts (sub $100k) can close faster than large amounts ($5m Series A round) because larger investors generally require more protections in their larger investments.

Investor is asking:

• Will this startup be willing to afford me the protections I want in this deal?
• If everything goes totally sideways, what will be my legal recourses with this company?
• Is this Founder a total pain in the ass to work with? If so, will it always be this bad?
• Are the things they are pushing back on a reflection of some other issue I should be concerned about?
• Do I still feel good about this deal?

If you’ve made it past every one of these hurdles and on past the closing – congratulations! You are one of a very small percentage of startup Founders who has made it through the “startup investor gauntlet!”

While the path we laid out here is fairly linear, the path of raising money is not. It’s a series of starts, restarts, step back 3 paces and so on. You’ll go for weeks without hearing from a single investor and then get 4 requests for a meeting in the same day. While the process to you is very linear, every investor is in many stages of discussions with startups all the time. A lot of this is just you finding the right timing with the right investor with the right pitch.

Before you consider sending a single email or making a single call to prospective investors, we want to make sure you are using the best possible inroad – which almost always means a personal introduction or deliberate connection.

If it’s not immediately obvious why that’s important, picture two different ways you could be introduced to a total stranger.

Hey Shirley, my name is Ted. I’ve got a startup opportunity that I think you’d really love and…

OK that sounds sketchy. Why is this person calling me? I’m totally distracted by the fact that I have no idea who they are or how they got my contact information that I’m not even listening to their pitch. With each passing second my finger moves to the “end call” button.

Hey Shirley, it’s Laverne! How have you been? I wanted to give you a quick call because I just met with a friend of mine named Ted and was hoping to introduce you to him. He has a cool idea that I think you’d like…

Totally different vibe. Now instead of being freaked out that some random person is calling you, you’re happy to hear from an old friend and their introduction provides critical social proof that this could be a valuable person to meet.

Now imagine you’re an investor and you get hounded by strangers for a living. How much more receptive would you be to a warm introduction from a trusted colleague than a cold email from an “About Us” page on your Web site?

The difference between warm and cold introductions is one of the most critical factors when contacting investors. So much so that we’re going to spend an entire section just talking about it. It’s worth reading because we want you to truly understand how to make warm introductions like a pro.

Investors live by their relationships. While it’s true that every now and again a totally cold lead will turn into an investment, it’s also true that every now and again someone wins the Powerball lottery. You don’t want those odds.

Instead you want to do everything in your power to find some connection back to that investor, whether it’s as basic as a shared interest (college alumni, favorite hobby) or as direct as a close colleague that you both know.

The following steps will help you increase your odds when attempting to make first contact.

The single best connection you can make is through a trusted friend. Even if the connection is a bit distant, it’s still better than almost any other inroad. We all build relationships based on trust, and trust is established from previous interactions.

You’ll want to work backward from the who investor knows, not who knows an investor. Start by researching the investor on Linkedin, Facebook, and Twitter, looking for any references to “mutual connections”. Write down who those connections are. You’re going to start reaching out to your own connections first in order to ask them to make the introduction.

Of course having a connection doesn’t necessarily mean someone is willing to make the connection for you. There’s a concept called “Social Capital” and it refers to the equity built up between a person and their social connections. If you ask someone to make an introduction for you, you’re asking them to spend some of their social capital with that connection. Why? Because your friend is going to burn up some built-up trust in essentially asking the investor for a favor on your behalf. As such, just be mindful when you’re asking for connections that it’s more than just them sending an email on your behalf, it’s them burning up a favor between their social connections – and that has a real cost.

In some cases if you can’t find a personal connection, you may be able to lead with a mutual interest.

Your connections don’t need to be limited to these categories – get creative here! What matters is leading your own introduction with a notion the you’ve paid attention to what matters to them, not you. The connection doesn’t need to be more than a few sentences, but it needs to grab their attention compared to the 100 other pitch emails they will get today from Founders who spent zero time doing their homework!

Now it’s time to start ranking your prospects based on how well you know them. There’s a small bit of variance here, but you’re going to have the most luck with personal connections and the least luck with vague shared interests.

1. First Place: Personal direct connections
   If you know an investor, even vaguely, this is always your first ask. The exceptions here may be if the investor you know is just a really bad fit for this type of investment. Note that sometimes what will work is using those personal connections to do a few “practice pitches” before you hit your higher value targets. This can provide some early feedback that you will need to refine your pitch without the consequence of losing your most likely prospects on a “rough pitch”.
2. Second Place: Mutual Connections
   Anyone you have a mutual connection with should come next. The reason is that these are the most likely places where you will get a response at all. You may think “well the person I really want to meet with isn’t through a mutual connection, and they are my top choice!” That’s wonderful, but this isn’t a college application process where everyone has to consider you. Unless you can get a meeting, your preference on investor doesn’t really matter.
3. Third Place: Shared Interests
   Shared interests are the best way to launch into a cold email or phone call, but they are still a cold call. The likelihood of connection drops precipitously when you don’t have a personal connection to drive the response. If all other methods fail, and you have no personal connections, you should absolutely rely on shared interests as a lead, no matter how subtle. But save these contacts for last as they are the least likely to yield a response.

There is a bit of an art to asking for a connection. As we stated earlier, asking someone for any kind of favor is asking them to spend some “Social Capital” on your behalf. Therefore if you’re going to ask for a favor, there are some best practices here that lead to more consistent outcomes. For the purposes of this explanation let’s call your friend the “Connector” and the person you want to meet the “Investor”.

You want to make the Connector a hero. To do that, you have to think “what will make them look good in front of the Investor? In some cases, you may come up with nothing and that’s OK. But try to think of why an Investor seeing your deal would be compelling to the Investor. Whatever is compelling to the Investor makes the Connector look like a hero.

“Joe (Connector), I’d really appreciate an introduction to Jane (Investor). I saw that she has been investing heavily in cryptocurrencies and our new startup specifically addresses one of the biggest problems in that space, which is how to guarantee transactions. Even if she isn’t interested in our company, I think she’d appreciate absorbing what we learned by digging deep into this huge challenge.”

In that example you’ve focused on telling the Connector that if they make this introduction, the Investor will get access to valuable market information they may not have had before. Now the Investor may not care about that information ultimately, but you’re at least providing some value that the Connector can exchange with the Investor to make the favor seem more balanced.

Make the Connectors job easy. At the bottom of your email where you ask for a favor, include the actual pitch text you want them to send to the Investor. What’s important about this pitch text is that it’s brief, and it comes in the voice of the Connector, or if not, in a 3^rd party voice as if it’s talking about your company. Remember to stick to your Elevator Pitch fundamentals of focusing on the Problem, Solution and Market size. Beyond that, any traction you have or critical credibility indicators goes a long way.

“Netflix helps consumers combat huge cable bills and limited entertainment choice by providing thousands of popular TV shows and Movies for less than $15 per month. Over 50 million U.S. households subscribe to cable TV with an average spend of $80 per month for a fraction of the choice. The company is in beta test with over 5,000 homes.”

A “seasoned” Connector may wordsmith that a little bit, but it’s a 100x easier to edit some text than to write it from scratch. Make sure the copy you’re using is very matter of fact and not “salesy” as you don’t want to make the Connector sound like they are trying to run a sales pitch by their friend.

Your Connector may have some information about the investor you’re looking to connect with that is incredibly valuable. Instead of simply assuming that you know all there is to know about this investor, include a line asking what else they may know that could be helpful in your quest.

“Joe (Connector), if there is anything you know about Jane Investor that would be helpful to know before I reach out, I’d love to hear it.”

If you don’t prompt your Connector there’s a great chance they will never think to inform you. By asking a simple question you could unlock all kinds of valuable intel, from what deals they have done before (that you didn’t know about) to the fact that they stopped writing checks altogether 2 years ago!

This is just good karma, but if someone does you the favor of making a personal introduction, find some simple way to return the favor, even if it’s as simple as a handwritten ‘thank you’ card. Sending an email that reads “Thanks!” is a cop out. Nothing is cooler than seeing some unexpected token of appreciation from someone who you helped out. It just makes the world a better place.

Following all of these “best practices” doesn’t guarantee you an intro, but it sure does help improve your odds, and amongst connectors it’s considered the most common practices.

In today's world, you're likely going to pitch far more investors through an initial email than you will in person. A great Email Pitch won't necessarily get you a meeting but a bad one will definitely prevent one. Therefore, creating the perfect Email Pitch is essential.

The perfect Email Pitch is a little longer than a commercial but not nearly as long as an infomercial. Your goal is to pique the investors’ interest by tapping into each of the key areas they are interested in.

Investors hear hundreds of pitches per month, but in each case they are looking for a few key ingredients that make them lean in and ask for more. The key ingredients for an email pitch can best be described by what the investor is trying to ascertain as quickly as possible:

Your goal is to convey this information in as few words as possible while pushing all the buttons that will get the investor interested. We’re going to walk through each of these ingredients in detail so that you can begin to craft the absolute perfect email pitch.

Just like you, investors get tons of email, and just like you, they ignore most of it. Investors are regular people that are trying to make sense of all the noise in their inbox like everyone else. So, it helps if you can make their lives a little bit easier by catching their attention in the right way.

Professional email marketers will tell you that a subject line is almost as important as the email itself. That’s as true here as anywhere. If you can’t craft a powerful subject line that gets past the one second of attention your investor will give you, you’ve already lost. Don’t think of the subject line as simple a field to fill out in your email, think of it as the single reason an investor will take the time to consider you at all.

Examples of Bad Subject Lines:

In each case your problem is that you’re not making the subject relevant, or at worst, you’re turning the investor off altogether. Instead, think of how to make a strong personal connection that will allow the investor to connect your concept to things they care about.

Examples of Good Subject Lines:

You can probably detect a pattern here. Your subject line is your one opportunity to take the most saleable element of your business pitch and distill it into a few words. If nothing about your pitch is likely to get this type of reaction from an investor, be mindful of that if you don’t get a response back. Just like you, they are looking for something special to respond to.

Every good introduction starts out with a meaningful personal connection. It's the difference between a warm handshake and a cold call. Starting your Email Pitch with a well thought-out personal connection makes all the difference in the world. We cover the important and mechanics of this in detail in the “Getting Introduced to Investors” section.

There are very few legitimate investors in the world, so sending out a blast email to all of their addresses with the same generic introduction is a horrible waste of opportunity, and beyond that, it's just bad etiquette.

It's often unlikely that you personally know the investor you're reaching out to, or even have a personal connection to them, so if that isn't the case, here are a few ways you can make your intro more personal:

• Use their First Name
  Unless you're talking to an 80-year old curmudgeon banker, people in today's world like to be referred to by name, and not “Mr.” or “Mrs.”. You'll earn more points by being personal than you'll lose points by not being formal enough.
• Reference a FriendThe best possible introduction is through a mutual acquaintance. If you cannot get introduced through a friend, then your next best bet is to at least point out that you know someone in common. Personal relationships are often exposed on every social network from LinkedIn to Facebook. Look for every possible opportunity to connect your social circles so that you can give some credibility to your person.
• Cite their Background
  Almost every investor you'll talk to has some sort of background information online, whether it's through LinkedIn.com, their blog, or their corporate Web site. Research who they are as a person and look for a connection that you two might share. Maybe you went to a similar school or they have invested in an industry you are getting into. Doing your homework goes a long way.

Here's an example of a really bad introduction:

“Dear Mr. Investor, I have a business opportunity that you may be interested in…”

You really can't get more impersonal than that. That's the kind of terrible introduction you see from spammers trying to offer you a share of their "$21 million fortune that they need your personal help to recover". It's terrible, non-personal, and boring.

Now let's add a little more personality to the introduction:

“Dave, I noticed that we're both friends with Greg Smith from Fancypants University. I'm in the process of launching a company called NetFlix.com that provides streaming video and saw that you were an early investor in Blockbuster.”

In this case the investor "Dave" knows you are referring to him personally because you took the time to get his name right and address him as a person. You then connected him to Greg Smith which means you've got a social connection that he can reference you by. Lastly you mentioned the Tag Line for what you do by connecting that to something he's done in the past. Congratulations - you've made a personal connection!

Building the right personal connection is really a matter of common sense. You're likely bombarded with offers from advertisers all the time. You know junk mail when you see it and you know personal mail when you see it. Think about your Email Pitch like those solicitations - the more personal it is, the more likely it's read.

Your Elevator Pitch is the heart and soul of your email, and you shouldn’t be afraid to get to it as quickly as possible. Without a warm introduction you may come across as too forward, but a long introduction that doesn’t get to the point will be equally annoying to an investor!

Even a bad pitch can be salvaged if it’s coming from the right source. In just a few sentences your Elevator Pitch should convey three distinct points – the Problem you solve, the Solution you provide, and the Market Size of your potential customers.

In our example we reference NetFlix.com in a very simple way to identify the Problem, Solution and Market Size in just two sentences:

NetFlix helps over 90 million Americans avoid driving to the video store by delivering their movies directly to their doorstep without ever paying late fees.

In the context of our perfect email pitch, we want to draw attention to this passage quickly, and make sure it’s refined down to the bare essentials.

A quick side note here: although “what you do” is obviously important, you may be surprised at how many investors will actually skip over this part of the email and go right to the other points such as “Traction”, “Social Proof”, or “Team”. We’ll explain these in a moment but keep in mind that while you’ll want to nail the Elevator Pitch, the rest of the elements of these emails are just as important in hooking an investor’s interest. Even a bad pitch can be salvaged if it’s coming from the right source.

Above all else, investors care about "traction". Traction is an indication that the business is quickly gaining momentum. Every investor is interested in a business that's taking off.

If we were to say "Our business has grown to over $50 million in sales in just the first two years" you would likely be interested in knowing more without even knowing what we do. The traction alone sells the opportunity.

You don't need to have a huge spike in sales to get traction (although it sure helps). You can show traction through an increase in Web site traffic, customer demand, strategic partnerships and key hires.

Let's add to our email introduction by providing some traction:

In the past three months we've added 10,000 new users to our site and are doubling that rate every month.

When an investor reads that line she is going to instantly zoom in on the words "three months", "10,000 new users", and "doubling every month". Those key stats imply a rate of growth that looks like a hockey stick on a chart that points up and to the right. Your Traction should always focus on an area of the business that is growing incredibly fast or is wildly positive.

Notice that we didn't cite revenue numbers because we probably don't have any yet. We're showing that the demand is definitely there, which may imply that revenue is forthcoming. Your Traction is all about momentum, wherever you have it most. If revenue is your traction, by all means – use that!

You'll want to focus on what aspects of your Team's background are most salient to the success of this particular company. It's great that your Chief Technology Officer earned his Doctorate from MIT, but if you're building a fruit basket company, that may not be the most relevant piece of information.

The best references from your Team indicate that they have either done this before successfully or have some specific domain expertise that is highly relevant to the product or market you're servicing. In this case, the fewer, more targeted references the better. It's always best to combine the particular title or experience they have had with a well-known brand or entity they earned that experience from:

“Our team includes the former Chief Marketing Officer from YouTube and the Head of Digital Distribution at ABC Networks.”

In reading this one sentence an investor is thinking "OK, if these guys are building a streaming media business it's helpful to know they have relevant marketing expertise to acquire customers in this space.”

Showing your Team's highly specific expertise is a great way to both promote yourself and allay fears that you have no idea what you're talking about! (Yes, those fears exist).

Your Social Proof is the endorsement from others that you're legitimate. Like any type of endorsement, the value of your social proof is proportionate to the credibility of those endorsing you. Think about how much of a difference the right Social Proof can make.

Here's your pitch with no Social Proof attached to it:

Now let's deliver the same pitch with just one endorsement:

In both cases your pitch is exactly the same, but when backed by Social Proof you go from getting escorted out the door by security to getting the red carpet rolled out to you. There are many ways to build Social Proof around your company, and as you can see, the importance of that proof is critical to getting real attention from investors.

The main sources of social proof tend to be:

Looking at our pitch for NetFlix, we would likely try to establish some Social Proof by highlighting the Advisors we have added to our team:

Our Advisors have each personally invested in the company and include Dave Brown, (VP Channel Sales, HBO), Rob Black (Former President, Paramount Pictures) and Jeff Orange (SVP, Google)

Similar to the Team section, your Social Proof should be a direct reflection of how the relevance and credibility of that proof directly reflects on the quality of the idea. Unless they are industry celebrities, their names are almost irrelevant here. What investors will key in on is their titles and the companies they worked for.

Assuming you've hit on all the high points of your Email Pitch, you should conclude with "The Ask". The Ask should include three main points:

1. Raise Amount
   How much are you raising? Be very clear. If you're raising a total of $500,000 then say so. Investors tend to have minimum and maximum thresholds for their investments so it makes sense to let them know whether you're in their sweet spot.
2. Funding Stage
   Similar to the raise amount, investors want to know at what fundraising stage you're at (Seed, Series A, Series B, etc). If you're unsure of what this means, find out and be clear about how you communicate it.
3. Timeline
   Like any good correspondence, you want to finish with a specific request for someone's time. Obviously you're reaching out because you would like to discuss the opportunity, so focus on what an available time to meet might be. If you're going to be in town next Thursday you can mention that, but recognize you're more likely to meet on the investor's timeline, not yours. Even so, you should at least create a reference date to begin with.

Here's a simple ask that lets the investor know what the overall goals of the fundraise are and when they can potentially talk to you next:

We're raising $500,000 in a Seed Round which we'd like to discuss with you next week if you're available.

You can modify this based on your situation with the investor, but if you're not very familiar with this person, give them an adequate window with which to setup a meeting.

Here's the final product. Notice how it's short and to the point. The investor is going to read this pitch on his phone while driving to meet her spouse for dinner. Think about whether or not this will cause him to risk an accident by reading further (just kidding... sort of).

In less than 150 words we've establish a personal connection, explained how we're solving a big problem, begun moving the market, attracted highly relevant talent and advisors, and what we're looking to accomplish. Easy… right?

Your Email Pitch will be a critical tool that you use to communicate with investors. The key with the Email Pitch is to follow the system and make it count. Make sure you reference a mutual connection, include your elevator pitch, mention traction, showcase your team, offer social proof, and ask for a meeting.

A well-written and eloquent email pitch can help you get in the door to meet with an investor and give a full presentation. Take the time to personalize each email and make it count – you may only get one shot – so make it your best!

Now that you’ve done all that you can to get the introductions you need to potential investors, we’re going to begin setting up the process for actually contacting them. In this section we’re going to focus on how to setup and manage your prospect lists as well as how to actively follow-up.

For the purposes of this section, we’ll assume that you already have an email composed and you’re focused on a deliberate “plan of attack” to go through your investor list.

Managing your fundraise will certainly involve keeping track of all your potential investor prospects along the way. The problem you run into as you begin talking to an increasing number of investors is keeping tabs on where you stand with each, where you were supposed to go next, and who you're starting to lose contact with.

The most important aspect of raising capital is remaining incredibly active throughout the process. You can do this simply by maintaining a spreadsheet of contacts and continually updating it as you progress through the steps of introduction.

Consider segmenting your list into these categories:

Once you have your contact list setup, you can rank your prospects as we discussed in the previous section so that you are making your initial contacts in the order that you’re most likely to get an introduction.

The key to this list is keeping it updated and refreshing it at least once per week, if not more often, to make sure that you stay on top of your follow-ups in a routine manner but also don’t let your initial contacts go cold without a response.

You’re about to send an awful lot of emails, so you’ll want to create a small list of stock emails that you can copy/paste from to then customize further. Note this is definitely not the same as just carpet bombing everyone with the same email. It’s designed to take some of the repetitive work out of creating lots of emails from scratch, but also to make sure what you do say in each email is consistent.

If you find that one part of your email style works better over time (it should with practice) you’ll then update your template first so that each successive email uses your best style.

1. Connector Intro
   The email that you would send to a potential Connector to ask for a mutual introduction. This would include the value you’d like to potentially offer the Investor (this could change, so this is a good place to add all the various value prospects you can think of).
2. Investor Cold Email
   In the event that you don’t have a mutual connection, you’ll want to work on an email that leads with a mutual interest that you both share.
3. Investor Warm Email
   If you have a mutual connection, and assuming they are not making the connection for you, you’ll want to lead with how you may know each other. “We both know Wil Schroter, for example”.
4. Email Pitch
   This is the heart of your pitch. This is very important to have on hand as a template because you will be refining it over and over as you go forward.

Again, the important thing about these stock templates is that you constantly refine them as you learn more about how people are receiving your pitch and what types of communications work best.

The tendency amongst most Founders is to create a long list of cold emails, develop a pitch, and carpet bomb the entire list and just wait for “money” to call back. This works never.

The worst thing you can do – the absolute fastest way to ruin your chances – is to send the same blanket email to a list of investors. It’s as good as not sending anything at all. We can explain to you that investors can detect a stock generic email a mile away, but let’s take that off the table for a minute. What it really ruins is your opportunity to refine your outreach over and over, which is what makes it work.

The smart way to reach out to your contacts is in small batches. Let’s say you had 20 potential contacts. Start with 5. We know what you’re thinking “Well I need to raise money yesterday, why would I wait even a single day?!” Here’s why.

Every email you send, especially in the early stages, is an opportunity to test whether or not people are receptive to your message. The probability that you got it all right the first time – the intro, the email pitch, the subject, and every other aspect (including your pitch deck, business plan, etc) is pretty much zero. These pieces become “perfect” when they are subject to tons of iterations of feedback.

In order to do this, you need to send a few emails out, wait a few days for some feedback, and then refine with whatever information you’ve received. If you send 5 emails out and don’t get a response at all (it happens a lot) then wait a few days and send a few more out. What you want to avoid is sending all 20 with the wrong message, blowing your chance to send them again.

Well cover the details of your email pitch in the next section but it’s important to note that whatever you send, brevity is your friend. The longer you make your email, the less likely you are to get a response. All an investor needs to know in this first exchange is “Is this interesting?”. They don’t need all of the details about your business – that’s what your pitch materials are for.

We used an example of a pitch that you could arm a potential Connector with. Let’s take a second look at it here:

Could you write another 3 paragraphs about all the progress you’ve made? Yes. Should you? No.

Think of this like a movie trailer. You want this quick, punchy message to just pull the investor in – no more. Imagine if a Director created a 20-minute movie trailer – you’d walk out of the theatre in frustration! Keep your initial email to just a paragraph or two – no more. Keep revising your Stock Email Template (we covered this earlier) until it’s as punchy and potent as it can be. The goal is to get an investor to simply write back “Would like to hear more” – that’s it.

Once you’ve sent that email and your inbox is still empty with responses, you’re going to find yourself wanting to email out again – and maybe again. You need to be cool.

Investors are getting hundreds if not thousands of emails in a week. Their most important emails will be coming from people they are currently in the process of closing a deal with, or one of the companies they have already invested in. The least important emails will be coming from unknown potential startups like you.

If an investor isn’t answering your email it means they are too busy or not interested. Neither of which is solved by you sending a barrage of follow up emails.

That said, it’s definitely permissible to send a follow-up email – once. It’s possible that the first email just arrived at the wrong time, but not that likely. If you emailed and said “Hey this is Mark Zuckerberg and I’m thinking about doing a new startup, do you have time for coffee?” they would certainly find time in their calendar for you!

For those of us that didn’t start Facebook, our options are to send a follow-up email with the intention of providing a slightly different context for your pitch. If you send “did you get my message?” you may as well not send an email at all. You’ve added no new value, and if they got your message, what was the point of you sending another?

Instead, consider adding some new context so at least it’s worth taking a second look. Here’s an example:

Jane (Investor), just a quick update since I last mentioned MyCo to you – we just crossed 10,000 subscribers this weekend and we’re on track to surpass 100,000 over the new year. We’d love to find a capital partner who can help us to scale even faster.”

In that note you’re not referring to why they didn’t contact you. You’re offering another reason to contact you! It’s another way to follow-up without having to come across like a stalker.

As you learned in the “Pitch Process” section earlier, if an investor responds to your initial email they typically ask for some additional materials about your company, which will either be your Pitch Deck or Executive Summary.

What you will learn as you get into this process is that those documents can and should change over time as you react to feedback and revise your documents. What this means is that over a long enough period of time, you’ll have different investors who have received different versions of your materials.

This isn’t a huge issue in most cases, but if you want to be extra nerdy about how you manage the pitch process, we’d recommend keeping track of who gets which version of the materials you send out. You’ll find this comes in handy as you move from the email introduction process to the in-person pitch process as some of the docs that said you were going to be a $100 million market 3 months ago now show that you’ll be in a $50 billion market today. It’d be helpful to know what people heard last!

This is a bit of an aside, but in 99.9999% of cases, investors don’t sign NDAs (Non Disclosure Agreements) – so don’t even bother asking. At best it will make you sound like an amateur and at worst it will turn off an investor altogether.

Investors don’t sign NDAs because they are not in the business of stealing ideas and creating companies. Somewhere, somehow the myth of the inventor who “gives her secret sauce away” to an investor who steals it and builds Facebook (we see you, Winklevoss twins!) has gotten perpetuated with very little evidence to ever support it.

If your idea has a secret sauce that you can’t share with anyone, just talk about everything but the secret sauce. Talk about he market size, talk about how the product works, but don’t talk about how it’s made. If anyone can steal your idea just by hearing about it, well then it’s considered not very defensible in the market anyhow.

Besides that, professional investors are in the business of making investments, not stealing ideas, and their track record of not stealing ideas is orders of magnitude greater than their track record of plundering them.

Following up every email, every meeting, every action, is entirely your job. If you send a Pitch Deck to an investor and they don’t respond – that’s your challenge. That’s because of all the people in this process, you’re the one with the biggest stakes.

Often people will say they will follow-up and don’t. If you haven’t grown up in a business like sales, you’ll find this particularly odd. This is where your Prospect List comes in great handy. Every time you have an interaction with a potential prospect, you should be noting the date and the description of that follow-up. More importantly, you should be setting a date of your next follow-up regardless of when they said they will contact you.

Assume everyone is too busy to follow up properly. As such, if someone says “I’ll follow up with you next week” then put a note on your list to do your own follow-up a few days after their suggested date. You’ll find that you’re the one carrying the conversation a lot. Don’t be shy about that. Good, determined Founders keep the process alive no matter who says they have the ball.

You’re now ready to conquer the final frontier: actually engaging with potential investors.

But how do you reach out? Who do you contact first? What details should you provide investors to generate a good response rate, let alone a response at all? We’ve helped demystify the investor outreach process at every turn so you can tackle this head on in the wild with confidence.

Instead of blindly carpet bombing investors with cold emails, we see now that finding an inroad to investors through a personal connection and asking them to make a warm intro for you is hands down the most optimal route you can take.

If, like many Founders, you’ve ever wondered why you were hopelessly stuck in “0% email response rate limbo” (AKA The Upside Down), you now understand why firing off an email with a subject line like “Investment Opportunity” will almost always get relegated to the trash bin, whereas a hyper-personalized subject line will help you cut through the inbox noise.

We know the exact ingredients to work into the investor email: a highly-personalized lead-in; your elevator pitch; a few words on traction; details of your team most relevant to the success of the company; any social proof via endorsements from advisors, customers, the media, or other investors; and wrapping it all up with an ask.

Congratulations! We threw everything but the kitchen sink at you when it comes to funding, and if you made it this far, it means you have superhuman stamina. Seriously, give yourself a pat on the back. We still have a ridiculous amount of useful information for every phase of your business. Once you’ve had a chance to catch your breath, check out our playbook on Customer Acquisition here.