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The Right Way For Entrepreneurs To Approach Investors

The Right Way For Entrepreneurs To Approach Investors

Just A Warm Reference Introduction Is Not Enough To Contact Investors

One of the most common problems first-time entrepreneurs face is how to get access to investors. The investor community seems to be close-knit and closed, and it seems very difficult to gain entry into it.

The standard advice so far has been that you need a warm introduction. You are told to find someone – either an alumnus or a friend, or another entrepreneur who’s been funded by the investor – so that he can introduce you to the investor. This is one reason why so many entrepreneurs are actively looking for connections on LinkedIn, so that they can get these doors opened.

However, times are changing and while a warm introduction is always welcome, there are lots of good investors who will respond to high quality cold emails as well.

However, it takes time and trouble to craft a good email. Please remember that an investor has limited bandwidth, and because there are lots of entrepreneurs who are pitching to him all the time, he’s often swamped with email.

This is why you need to be extremely thoughtful and careful when you send the email, because you’re not going to get a second chance. The trick is to think about how you can add value to the investor’s life. Please have realistic expectations – no one is going to fund you based on your email – all you can ask for is a meeting, and this is what your single-point agenda should be – to get him to agree to meet with you!

You need to do two things.

  1. Firstly, you need to do your homework about the investor, so you understand what his sweet spot is.
  2. You then need to show him how you fit into his sweet spot.

Your email should show that you have researched him thoroughly, and that your startup fits his investment thesis. Your email should be designed to pique his curiosity and interest. It should intrigue him , and demonstrate that he is likely to become smarter as a result of interacting with you. He will then be willing to take the time and trouble to engage with you.

You cannot be lazy and use a “one-size-fits-all” generic email which you shoot off to every investor that you come across. If you do this, your response rate will be deservedly dismal – not because investors are not accessible, but because you have not bothered to take the time and energy to personalise your email. And if you don’t get replies, please stop complaining that Indian investors are uncaring and thoughtless – it just means that you need to do a better job at connecting with them!

It’s only if you put the investor’s interest first will you be able to maximize your chances of getting a meeting with the investor. This is what your philosophy should be – and this is a far more effective approach, rather than looking for common acquaintances.

[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]