The best ways to approach investors for fundraising
Knowing which investors to approach for investment in your startup is incredibly important. Without a plan in place about which investors to approach and how to tell your story, there is very little value in actually pitching for investment due to a lack of focus. However, when you have done the important research and know which investors you want to target, there is still the matter of actually being able to get in front of these investors.
Unfortunately, as many have experienced, investors are very busy. They receive hundreds—if not thousands—of investment pitches every year, which makes it difficult for you to stand out from the herd. Again, doing your research about the investor, including which investments they have previously made and what their investment mandate is, certainly helps, but it is not all. You need to be able to get a meeting with them first. Below are two ways in which you can approach investors effectively, and a tip at the end disclosing the best strategy for the perfect introduction, no matter the approach you take.
Just like the research that you have done online about the investor, including looking at their website and profiles on LinkedIn, Crunchbase or MAGNiTT, online platforms allow you to easily approach investors to have a chat with them. Through most platform, like LinkedIn or MAGNiTT, you can send an invitation to the investor, after which you can talk to them about your startup.
There are a few tips and tricks when it comes to approaching investors like this. Again, investors get a lot of such requests, which means that yours easily falls through the cracks. The first trick is to ask for advice first, before actually asking for investment. When you show that you have done your research, by stating that you have seen that they invested in startups similar to yours, and ask them how they would approach a certain problem that you have, they are much more likely to lend you a helping hand. After all, it shows that you did your homework and are within their investment mandate.
Secondly, it matters whom you talk to. While it is true that partners have the ultimate say in the investment decisions of the firm, that does not mean that they are the best people to talk to. Usually, analysts and associates make the initial decision whether to have your startup pitch to them or not, and might even have more time to consider your startup. Hence, approaching analysts and associates, who are the gatekeepers to the venture capital firm and have more time, might be a better option going forward.
Offline events are another good way to meet potential investors, especially at events catered to venture capital and startups. Examples include STEP Conference, GITEX Future Stars, RiseUp, and ArabNet events, where startups showcase their products and services and investors size up potential investments. Moreover, unlike online interactions, you are able to show your passion and pitch your startup in person to these investors. This could give you an edge if you have done your research on the investor and what they are looking for.
While these events do cost money and time to attend, it is certainly worth it in order to meet potential investors, especially at the larger events in the space. Again, as mentioned above, it sometimes makes better sense to ask for advice than ask for investment, as this will hook the investor onto your startup and buy into the idea more readily.
Best strategy: Warm introductions
However, no matter the situation – online or offline – it is always best to get a warm introduction to an investor. That could be an introduction by a friend that happens to know an investor, a committed investor to your startup that invites other investors to join, or other entrepreneurs at portfolio companies. Through a warm introduction, the investor will see that you have support from a person that he or she trusts or has made returns for them already, which acts as a vote of confidence for your capabilities and startup idea.
After the warm introduction, the investor will be much more inclined to look into your startup and evaluate whether they want to invest in you. Of course, it all comes down to your startup, your founding team and the idea that you have. But, as established before, if you know how to position your startup and you have gotten in front of the investor through a warm introduction already, the chance that you will receive investment has already gone up. Through this, you will certainly increase the chances of raising investment for your venture and growing your company to be the next unicorn in the MENA region.