March 22, 2024
Michael Simpson talks about handful of the most important channels he believes every entrepreneur should know about to gain investors.
Choosing an investor is like getting married minus the fancy wedding and exotic honeymoon. And it is not so easy to get a divorce. So, when choosing an investor, it’s critical that you are able to seek out the right partners. But how do you meet them in the first place? In his book The Secret of Raising Money, Michael Simpson discusses this subject at length. Below are a handful of the most important channels he believes every entrepreneur should know about.
Undoubtedly, the best outreach method is a warm introduction, i.e., an introduction from a mutual friend or acquaintance. An investor is significantly more likely to give up his time to talk to you if you come vetted and approved by somebody he knows. In fact, warm introductions are the default channel through which venture capitalists (VCs) meet new companies. Investors receive far more pitches every year than they could ever evaluate (e.g., Sequoia receives over 3,000 annually). Hence, they need filters. This is why there is often no obvious email address published on VC websites to which entrepreneurs can send pitches.
As a result, it’s crucial you spend your time and energy focused on searching out and making requests of well-connected folks rather than reaching out cold. But not all warm introductions are created equally. If the investor does not really know, like, or respect the individual connecting the two of you, your chances of a meeting may be more hindered than improved. The investor will naturally project onto you whatever qualities he associates with the introducing party.
Wellfound is a matchmaking service for early-stage investors and entrepreneurs. It is the most powerful online tool available for meeting investors. It allows you to search a huge database, filter as you please, and reach out. Wellfound’s popularity has grown so significantly that your startup’s profile is frequently the first place an investor or candidate will look when trying to learn about your business.
Many investors write blogs and engage with social media. People, no matter how big, love getting positive comments. Some investors even discover deals through their comments. One way to take advantage of this is to build a relationship over time via commenting. Soon after a post is released, write a thoughtful and reasonable response. Do this enough, and you will get noticed. If you are looking to raise money immediately, this is not the best approach to take, but it may be fruitful if you have some lead time.
Out of all the outreach methods, cold emails are one of the poorest uses of your time. They can work, but asking for introductions to investors is the highest ROI networking activity in which you can engage. That said, if you have to write one, here are five tips for ensuring your email is answered:
These are just a few of the most important channels for meeting your next investor. For those of you who’ve successfully raised VC funds, what would you add to this list?
Michael Simpson is the co-author of The Secret of Raising Money.
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