No Snivelling - Home

How to find investors for your startup

by

I’m often asked to make introductions to investors, and the flow normally goes like this.

Startup: “We’re ready to raise money.  Can you make introductions to investors?”

Me: “What investors do you want to meet?  Why are they a good fit for your startup?”

Startup: “…”

—

In all seriousness, it’s very common for entrepreneurs to forget that investors have areas of focus, and the more they can target their potential investor pool, the better.  It shows investors that you’re thorough, and increases the chance that your eventual investors can help you, because they’ve seen your industry before, they have relevant connections (other investors that like your space; bus dev partners; interested acquirers), and obviously have a deeper passion for what you’re doing.

Some ideas for how you do this:

  • Go to a white board and list your competitors, or even those in tangential spaces.  Then, go to AngelList or Crunchbase and find their investors, including Angels, Seed Funds, and Venture Capitalists
  • Find conferences that focus on your industry.  Then look at the attendee lists and sponsors.  You’ll often see the investor pool that’s of interest, and you’ll also likely find corporate investors (who get less coverage on Techcrunch) and below-the-radar contacts for you to consider.
  • On another white board, list all of your wealthy friends or past coworkers.  Particularly focus on those who you think would absolutely rave about you.  They may not eventually invest in your company, but when they make introductions for you (because you’ll ask them to do so), you know that the message they deliver will be extremely positive.  And, of course, they’ll listen to your first pitches, to give you feedback and help you improve/hone your message.
  • Talk to your friends (who know you well) and ask them for their list of favorite, most supportive, investors.  Again, they may not be as likely to actually invest in you, if they focus on other areas, but with a strong referral they’re much more likely to meet with you, give you feedback, and possibly know other investors who may have a passion for your space.

Then, when you do reach out to people, you can include some of your lists, along with why you think they’d be interested in what you’re doing.  When I see those lists, it makes it easier for me to remember if I have good contacts for them, and those lists also help spur other ideas (it’s always easier to review a list than look at a blank page).  Plus, it make it fast and easy for you to really personalize your introduction mails, and shows that you do your homework and are detail-oriented (and respect/value my time, and the investor’s time).

These ideas are all pretty basic, but are often overlooked.  What other suggestions do folks have?

Update: Joe Wallin suggested this great post by TA McCann – Raising Startup Funding – 7 Things you Need to be Prepared

Get some practice fights before fighting Tyson

by

Just a quick thought. Because I’ve recently had more than the normal share of young entrepreneurs pestering me for introductions to various angel investors and VCs.

If I don’t know you, I’m not going to be making any introductions. Even if I DO know you, if I don’t like your idea or implementation, I’m not going to make any introductions either. And even if I think your idea’s OK (but not great), I’m probably not going to send the mails on your behalf.

See, you may not be ready yet. And, of course, it’s my reputation being put on the line (maybe even more than yours) when I make the call on your behalf. And that goes for all of the other favors that you try to cash in. Make the best of it (and only make intros when they’re warranted), or else you can start to expect a whole lot of silence when you make your next request (or introduction).

Just because you have someone who can make the intro to someone else, doesn’t mean it’s a good idea. Your product may not be there yet. You may not have pitched enough minor-leaguers first (and gotten feedback, iterated on your idea, and honed your delivery). Or, you just may be indicating that you don’t want to do all of the hard work to get your legs under you. You may think that all you need is (a little bit of money, an introduction, someone to buy you, etc. etc.).

No, what you need to do is to sit down, shut up, and build something that large numbers of people are clamoring for (and for which you know specifically what you want from investors). THEN it might be time to call in some of those favors.

As for now, Shut Up and Row.

Learning about Venture Capital Investing and Terms

by

A friend, new to the startup investment space, asked me today how to learn about all of the different terms, players/investors and approaches in startup investing.  I started to rattle off some of my favorites, and then thought about sending a follow up e-mail with links, etc.  Of course, a blog post is probably a better way to share these, so others can access them. Read these blogs (start 12+ months back, and read all of their posts) and follow their tweets:

Understand these startup incubators:

Because Quora is frequented by so many VCs, entrepreneurs and the like, it’s also a great place to get almost any question answered about term sheets and colluding VCs 🙂 Great News outlets for startups:

Events to attend (not too often):