Following my post last week with 22 investor databases (many of which I am listed in), I received more than 200 cold emails, Twitter and LinkedIn dms. Thank you to everyone who reached out, and apologies for the delay in getting back to you all, I only got around to replying at the weekend, and still have a couple to go. A few of the emails were excellent, more were average and a large number left a lot of room for improvement. Below I detail the trust / time conundrum and the ways to increase responses and conversion. I’m not going to touch on how to build a good deck in this post… but that will come soon.
Cold outreach in many industries is frowned upon. It’s seen as the lowest-grade channel for growing sales and, for some, the channel of last resort. However it is a vital channel in a fundraising process for an early stage startup and one that, with the right approach, can drive fantastic results. There was a time when some VCs and Angels would try to dissuade cold outreach, with some claiming they would only speak to warm introductions.
(note Harry is no longer at stride, but runs his own fund 20VC Fund)
Investors who are not open to cold outreach are letting down the venture ecosystem, and missing out on great returns. It’s against the very nature of venture capital and excludes under-represented founders, I could write a lot more about this but Del Johnson has already put together an excellent piece on it.
Thankfully there are many investors who are open to cold outreach, and I think the number is increasing. But having a list of investors is only the first step.
Honing your research and crafting outreach which builds trust quickly is an art which unfortunately isn’t taught in many schools. But not to worry - I’m going to share my playbook for building trust quickly.
⏳ The Trust v Time Conundrum
Typically it takes time to build trust. When many Founders think about how this translates to written outreach to an investor, they write more. They pour their whole story into the email. This may occasionally work, but the vast majority of investors are time poor. As a species our attention spans are shortening (at an alarming pace). The conundrum then is how to build trust as quickly as possible, or in as few words as possible.
The key to building trust quickly is to give.
You’re thinking ‘How do I give when I’m reaching out to ask for money?’
I’m not talking about sending them a gift (though I have seen that done). The most valuable asset to the best investors is their time. For them it’s more valuable than money. You can give them the gift of time by:
Researching initially to make sure your company is in a space or at a stage relevant to them
Distilling your pitch down to the core points (more on this below) to keep the email short
Attaching a deck to the email (pet hate is Founders sending outreach without deck)
Enabling them to quickly schedule a call if interested with a Calendly or similar link rather than email ping-pong
For more on building trust quickly, see this Farnam Street blog piece.
📙 The Playbook
🎯 The Basics
It’s amazing how many emails I receive which don’t get this right, and though I imagine those reading this won’t be making these mistakes, it doesn’t hurt to cover it.
The outreach should come from the Founders, and ideally the CEO whose job it is to raise capital. If raising capital is not worth the CEO’s time then that says a lot about about what they think the investor’s time is worth.
Ensure the email is from your name, rather than an ‘admin@’ ‘sales@’ or ‘info@’
Setup your email with a profile picture. Make it a high quality headshot where you can see your eyes (don’t wear sunglasses). This also builds trust.
Ensure your email has a signature with your name and title and a link to the company’s website.
Write directly to the investor. Do not spam 100 investors on bcc.
➡️ Subject Lines
The subject line can be used to highlight your email in an investor’s inbox. It is therefore very important.
Do not fall into the trap of using ‘tricks’ to get an investor to open your email. This isn’t the same as a marketing or sales email, typically investors will open every email they receive from companies looking for investment. Putting ‘Re: Our meeting’ or other such shady subject lines destroy trust and set you off on the wrong foot.
There are two types of subject lines that I have seen which grab my attention and get priority in my inbox:
‘What Company Does / Most Impressive Metric / Round Details’ This proves to an investor before they open the email that it is in a relevant space and at a relevant stage for them, getting you priority in their inbox ahead of those that require opening to prove this.
Example: ‘NFT AI marketplace / 5,600 users on waitlist / $1m Seed Round’
‘Thank you for writing / sharing your thoughts about…’ Citing a recent blog post, podcast, interview or tweet from an investor demonstrates you have spent time researching them.
Example: ‘Thank you for sharing your post on investor databases & details of our seed round’
The key elements to a successful introduction:
Ensure you address the investor by name (those that don’t are obviously spamming)
Explain why this opportunity is relevant to them - this demonstrates you have done your research
Explain the problem you are solving
I know you invest in marketplace businesses and enjoyed your deep dive on marketplaces on your blog. We are on a mission to democratise access to the NFTs. NFTz is a marketplace connecting creators with NFT collectors, we solve the problem of discovery with an AI-driven matching algorithm.’
This is the main course. It’s tempting to write about all your metrics, highlights and progress so far. Don’t give-in to temptation. Considerations for the body:
Focus on the 3-4 most impressive developments / KPIs / progress so far
Formatting is key. Given shortening attention spans; breaking long paragraphs up and distilling them down to bullet points will keep the reader engaged and highlighting important KPIs in bold can also be useful
Explain how much you are raising and what you are using the funds for
Detail any progress on the fundraise to date
‘Here’s a summary of our progress so far:
Product beta is live with 10 creators and 200 buyers, 80% of which are daily active users. 50% of beta users have sent us product feedback which is feeding into our roadmap.
Our founding team is ex Coinbase and strong mix of technical, sales and operations.
We plan to publicly launch the platform in November once we have a 60% conversion rate with our matching algorithm.
We are raising a $1m Seed round, of which $300k is already committed from prominent Angel investors. We plan to use the money to hire 3 engineers, and to get us to $2m annualised revenue, when we plan on completing a Series A.’
Keep the ending short and make it easy for the investor to book a call.
‘If you are interested in learning more about the raise, we would love to speak to you. Either reply to this email or tap this Calendly link to book a convenient time for you.’
🔑 Further Keys to Success
Always attach a deck. If you don’t have a deck, then you have an idea, not a company and you’re not ready to speak to investors.
Always follow-up. Like you, investors are busy. Interesting items they flag for later get pushed out by newer priorities. I would have missed out on a couple of gem investments had the Founders not followed-up. Most email tools these days allow you to do this automatically when you send the first email.
Channel selection - email may not always be the best. Look at where the investor is active. Would Twitter or LinkedIn be better channels for outreach?
Injecting personality - if you feel you have a good sense of the person you are reaching out to from their public writing, then feel free to inject some personality into the email. It’s a risky strategy but can pay off if you’re a good judge of character.
If you want to read more on cold outreach, I recommend reading Yulia Bel’s post here.
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Thanks so much for sharing this Alex! This is the most practical (and simple) guide to cold outreach I've come across! INVALUABLE!