“It’s not about ideas. It’s about making ideas happen.” — Scott Belsky
While this is golden advice, you might struggle with making things happen, especially if you’re strapped for cash. If you are working with scarce resources in a startup or a small business, you might need some outside investment.
And to get an investor or two on board, you need a foolproof investor outreach plan.
Today, you’ll learn how to reach out to investors so that you can successfully scale your startup and set yourself up for success.
What Is Investor Outreach and Why Is It Important?
You may not be able to buy happiness with money, but you certainly need it for business success. No startup or small business can operate for long without a healthy source of capital. From sales and marketing to product development and diversification, you need money to make things happen.
Investors can provide the financial support you need to set your business up for growth and continuity. They can also offer much-needed mentorship, advice, and guidance to help you along your entrepreneurial journey.
But you cannot go and knock on any potential investor’s door asking them for money. You need robust investor outreach strategies to grab their attention and leverage professional relations that can be beneficial for your business.
Loosely defined, investor outreach is the strategic process of approaching potential investors, pitching your business, and convincing them to fund your operations. It is an integral part of any fundraising process for startups or small businesses.
Whether you’re a bootstrapped start-up looking for pre-seed fundraising or raising funds for business expansion, you cannot make headway without a detailed and actionable investor outreach program.
Here’s why:
Investors Are Busy People
You’re not the only startup pitching its idea to an investor—it’s a highly competitive niche filled with businesses like yours looking to secure funds. So, the startup-to-investor ratio is skewed and certainly not in your favor.
Then there’s the matter of compatibility. Not every investor will be a good fit for your business. They must feel connected to your startup, and you must be convincing for the partnership to be successful.
So, you need to aim for a bull’s eye when you approach potential investors for funding. A well-researched investor outreach strategy will give you the competitive edge you need to court a potential investor. And finding the perfect fit will be easier said than done.
First Impressions Can Make or Break a Deal
Cold outreach is a universal method of approaching investors for your business, which is why it needs to have enough spark in it to impress your target audience. Remember that your target investor is largely unaware of your endeavors, and this outreach is your elevator pitch to them. You must be convincing, or else you may paint your business in a poor light.
Having a good investor outreach strategy can also contribute to improving your brand reputation. Even if you don’t succeed from the get-go, you can certainly make your startup more memorable so that the next time you approach an investor, they will recognize you.
You Can Increase Chances of Conversion
A well-planned investor outreach will help you maximize your appeal and increase your chances of securing funding for your business. It can help you hit the bull’s eye if executed well.
Investors like to see effort, and your investor outreach strategy is real-time proof of your dedication to your business. They tend to take an interest in startups that have clarity of vision and demonstrate strong conviction.
A Step-by-Step Guide to Investor Outreach
Now that you know why investor outreach is necessary, it’s time to learn how to start building a viable plan. It will take a bit of your time, effort, and resources up front, but isn’t running your business all about investing a lot of yourself in it?
1. Set A Goal
Ask yourself the primary goal you want to achieve by reaching out to investors. Most startups turn to investors for capital, but it’s important to be specific. What kind of investors do you want to approach? What do you need from them? Do you want to gain a particular percentage of your future capital from this outreach plan?
You may prioritize industry advice or an extended consultation instead of financial help. Or, you can pursue both.
Clearly define your goals at the outset because this will chart the course for the rest of your strategy and approach.
2. Do Investor Research
As any episode of Shark Tank will tell you, no two investors are the same. You will be pitching to angel investors and venture capitalists with very different priorities. You need to do your due diligence to understand what kind of people may be interested in helping you realize your goal.
Moreover, the investors you have in mind may not always be the best fit for your business.
So, look up potential investors, go through their portfolios, and learn all you can about them to gather as much data as possible. This will help you shortlist investors who may be more receptive to your proposal.
Investor research is a non-negotiable requirement for streamlining your investor outreach. You need it to optimize your resources and ensure no time or effort is wasted.
3. Develop a Strategy
All business processes are guided by brainstorming strategies. Focus on an investor outreach strategy that’s aligned with your goals and makes the best use of your resources and the money you can invest in the process.
You can develop customized outreach strategies for different categories of investors to help increase your chances of onboarding them. Don’t be afraid to spend time working on these, as they are the groundwork you need to build your business for future success.
4. Prepare Collaterals
Cold outreach involves a pitch deck, a presentation, a brochure, and many more collaterals. Create a sales and marketing material deck through which you can reach out to investors.
You must have a digital and a physical copy of your collaterals ready at all times. This way, you will always be prepared to make your case, no matter where you are.
If you want to make the process even more seamless, create templates for your marketing materials, like your pitch deck, and set them aside for later use. When you need to customize the pitch to match your investor’s preferences, you will have a detailed framework to work from. It saves time because you don’t have to start from scratch.
Most importantly, make sure that your marketing collaterals reflect your brand. This will ensure brand recall and make your proposal more memorable.
5. Build An Email Campaign
You need an email campaign that accounts for all scenarios: What if the investor doesn’t respond? What if they do? Make sure your email campaign includes follow-ups, reminders, and more when you launch your investor outreach.
Perform A/B testing with varying subject lines and messaging themes to understand what works and what doesn’t. Chalk out your email schedule to keep your brand at the forefront of investors’ minds without annoying your recipients.
Consider investing in third-party email marketing solutions for your investor outreach if you have the budget for it. Such tools can help you automate the process and gain real-time data on your email campaign’s performance.
6. Do A Performance Analysis
Investor outreach is a recurring process for pre-seed and seed-stage startups or businesses, so you have ample time to perfect the process. The best way to do so is to perform an ongoing data-based performance analysis of your campaign.
The results of this should help you identify loopholes and learn what changes to make and where. By conducting a performance analysis, you can streamline your outreach process and make sure it yields a good ROI.
7. Build A Team
Lastly, put together a valuable team for investor outreach. Startup owners often make the mistake of doing everything by themselves. However, delegating tasks can optimize the outreach program and allow you enough time for your other decision-making responsibilities.
Don’t rush the process; take your time to build a team that can help you develop an effective investor outreach strategy and execute it.
5 Best Tools for Investor Outreach
Here are some of the best methods and technologies you can utilize for investor outreach campaigns:
Cold Email
Cold emailing is one of the most common methods for investor outreach because it’s easy to use, cost-effective, and straightforward. When done well, it can jumpstart your business to reaching the next level
You don’t need a mass email tool to be able to send messages to potential investors because you will be creating tailored pitches. You can do this with your regular business email provider to execute your cold investor outreach campaign.
Since most email providers like Gmail provide their services for free, cold emailing can be an excellent low-cost method of reaching out to investors when executed well. The only caveat is that you need to be tactful with your strategy. Potential investors are often flooded with such emails, and yours must be exceptional to make a mark.
Use an official email address from your company domain to send messages. Always attach branded collaterals and, most importantly, be persistent in your efforts without being pushy. This is a fine line to tread and it is where a well-defined outreach plan can help you maintain the vital balance.
You can invest in an email marketing tool like Mailsuite (more on this below) to enhance and streamline the outreach process and automate parts of it so they don’t require your direct involvement. Look for solutions designed to meet your needs—more on this later.
Remember that you need to budget for any such third-party solutions you use. It should yield a worthwhile ROI in the long run.
That said, cold emailing can also fail if you don’t plan it well. If you choose emails for your investor outreach, make sure you have a viable strategy in place and everything you need to execute it.
If you do not want to send cold emails or need a supplementary strategy, a professional networking platform like LinkedIn can help you with investor outreach. In fact, you can reach out to potential investors you have emailed via LinkedIn to enhance your chances of starting a conversation.
There are other obvious advantages to using LinkedIn too.
You have ready access to investors, their portfolios, and all the work they have done on one platform, which saves you time on research. You can use the search function or join LinkedIn groups while scouting for potential investors. Social media platforms like LinkedIn make investor outreach accessible for start-ups and businesses.
Once you find someone who fits your ideal investor profile, you can send a direct message to them via LinkedIn InMail. Because you’re messaging them from your LinkedIn profile, you can write a personalized message making a strong case for your business. And if your pitch intrigues them, your investors can do a quick profile check for verification.
LinkedIn is a dedicated platform for networking, so you can build a relationship with industry connections even before you make your pitch. You can connect with them over a call or meet them for a cup of coffee to discuss your business idea.
So, if you don’t want the uncertainty of cold emails, LinkedIn is a more viable option. It provides freedom and flexibility for investor outreach.
Mailsuite
Formerly known as Mailtrack, Mailsuite is an email management solution designed to help solopreneurs, small businesses, and startups with email exchanges. It’s a plug-in available for Gmail and Outlook.
How to reach out to investors with Mailsuite? There’s plenty you can do.
You can send personalized emails to investors and share pitch decks and reports that are only visible to authorized viewers. Send signature requests to speed up the process and be notified when your new investor signs a contract in real time.
Mailsuite also allows you to track clicks on your emails, giving you page-by-page data of recipient behavior. If you’re designing your first-ever outreach email campaign, you can utilize this data to fine-tune your messages depending on their performance. This data is helpful even if you’re sending your first or 1,000th investor email.
It is an excellent choice for investor outreach because it centralizes your emailing process, which can become very confusing and convoluted if you’re doing everything manually. With Mailsuite, you can seamlessly access all the data you need and get things done without switching apps.
Mailsuite can also help you maintain professional relationships, enhance email productivity, and improve time management. It is very feature-rich, with a human touch that facilitates meaningful connections.
You can choose paid or free pricing plans, although the free plan doesn’t give you access to all features. If you’re worried about your budget, the platform offers discounted pricing on quarterly and yearly subscriptions.
Google Ventures
Popularly known as GV, this is Alphabet Inc.’s dedicated venture capital resource for startups, solopreneurs, and the like. It is an independent subsidiary that provides financial assistance, advice, networking opportunities, and resources for startups.
GV can help you with investor outreach through its extensive network of investors, entrepreneurial advisors, and thought leaders. Because it has such a vast, trusted, and experienced network of potential investors, you can save yourself the trouble of investor scouting and use it instead.
You can connect with GV’s network to learn, grow, and transform your business. GV hosts networking events, conferences, and meetings where you can meet influential investors and expand your network.
GV also has provisions for funding startups in different stages. Whether you need pre-seed stage funding or investors for later stages, you can turn to it for help.
AI Software
You can also opt for AI-driven tools or platforms for investor outreach. There are many solutions available in the market, like ChatGPT and Canva, that can help you create sales and marketing collaterals, like pitch decks, automate your email communication, and more.
Do your research to find a good fit for your business. The most helpful solutions will likely be paid options, so you need to consider your budget before opting for one.
Key Takeaways
Investor outreach is all about finding the right partners to fund your business and take it to another level. In order to succeed in your efforts, you need to take a strategic approach to finding and reaching out to potential investors. It’s tough to succeed in a world where 50 million start-ups are launched every year.
Our advice is to start early and do your homework so that when it comes to raising funds, you can achieve your goals without too many failed attempts.
Don’t underestimate the complexity of investor outreach. The lack of a strategy can be detrimental to the health and success of your business.
Follow the tips we shared to get started on your journey.