Sourcing Investors: How to Find and Build Relationships

2 min read The first step in securing funding can often be the most difficult. How do you source potential investors, and when you find them, how do you build a relationship? While there is no one way to do either of these tasks, there are tips and tricks of the trade you can follow. Below, we discuss some of the options your startup has for finding and creating relationships with potential investors.

How to Contact Investors

In running a fundraise campaign, you’ll need to set up calls and meetings with investors who are busy and may struggle to find time to give you. How do you initiate these calls and meetings?

One option is to have a mutual contact make an introduction. Another way to get a call/meeting is to do some meaningful research in a trend, company, or market and offer to share the results with the prospective investor. Investors love to be educated about the market and companies and appreciate gaining relevant information that informs their decision process.

In your outreach, show the time and effort you’ve put into researching an area and some of the findings to pique their interest. Then ask for a call/coffee to review the rest of the findings. Investors are much more likely to find time for a meeting in which they will gain something rather than just give something. 

How to Build a Relationship with Investors

To pitch your deal, you must first start with a prospective list of investors. Include your contacts who are angels, family offices, and VCs. Canvas your network for those who know angels, family offices, and VCs. This is two degrees of separation which means warm introductions can work.

When it goes to three degrees of separation or more, then warm introductions no longer work. Include local venture capital and formal angel network groups you have heard about. Capture the names and emails of all the prospects and plan your approach for each one. 

After you’ve made contact and given the initial pitch, you want to keep those investors up to date on your progress with monthly mailers that are short and to the point. Focus the mailers on core results related to sales, team, product, and fundraise.  Avoid long stories as most investors want to know there are real results at play and will listen to the full story later.

Through a series of mailer updates, you can start to build a relationship with the investor. It starts with a prospective list and it’s important to take the investors on the journey with you.

How to Meet Investors in Person

When building a relationship with a potential investor through email, start with an introduction of who you are and what you’re all about. Share how it is relevant to them- bring something to the investor in addition to the ask for funding.

If you have a contact-making email introduction, provide them with a short two-paragraph summary. Include the following:

  • Who you are: Demonstrate experience and credibility.
  • What you are doing: Make it interesting.
  • Why did you want to connect: Is the connection about an investment, advice, feedback, or something else?

When you do finally meet the potential investor in person, bring something interesting to the discussion such as new information about a sector, company, or group that may be useful to them. It could also be the latest research you have done on a topic of interest. Keep the dialogue going until you build a rapport with the investor.

 

Read more on the TEN Capital Network eGuide: Closing the Investor


Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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