10 Tips for Networking With Investors
By and large, the majority of hugely successful ventures are companies that were successful in raising funding from VCs or angel investors.
It’s not that you can’t do it another way — there are plenty of great examples of startups that bootstrapped their way to success — but these are exceptions to the rule.
The problem is, only around 6% of startups are ever successful in raising funding.
This really puts an emphasis on your investor networking skills, and your ability to forge genuine connections with the people who may ultimately decide the fate of your foundership.
The great news is that networking with investors need not be so daunting, provided you’ve learned from the historical mistakes of others.
In this article, we’ll discuss 10 tips for networking with investors, so you can learn which mistakes to avoid, which tactics to double down on, and ultimately secure yourself that funding check.
1. Don’t Think Too Narrowly
The first mistake many startup founders make is choosing to network only with investors who might be a direct fit for them right now.
There’s a bit of logic here that appears to make sense, but it kind of hurts you in the long run:
“Why waste time on opportunities that won’t bear fruit right now?”
In the context of raising a pre-seed funding round, then, it might seem like a waste of time networking with venture capitalists who only fund Series A and beyond.
But you need to have the long-term success of your company in mind.
At a point in the hopefully-not-too-distant future, you’ll be looking to raise a Series A round, right?
Putting in the work to develop relationships that will bear fruit in the long-term is what networking is all about.
And that investor, if you’re able to forge a meaningful relationship with them now, might be able to provide additional help along the way, like introducing you to someone in their own network who is open to seed funding rounds.
The goal in networking with investors is a long-term play, and it’s all about the relationship.
2. It’s About The Relationship, Not The Transaction
The second mistake many founders make is being too funding-centric.
I know, I know. You’re looking to network with investors because you’d ultimately like to raise some funding, right?
But if you make that desire the center of your interactions with the investor, and you focus on the transaction (rather than building the relationship), you’re shooting yourself in the foot.
Take it from the 98% of salespeople who believe that relationship-building is the number one most important factor in closing deals.
And that, after all, is more or less what raising money is; a sales process.
When you first meet an investor (whether at a networking event or when introduced by a friend or colleague), introduce yourself as you would when meeting a friend of a friend at a social event.
In other words, don’t go in guns blazing and pitching your idea.
Trust that the conversation will naturally gravitate to a place where you can introduce your startup.
In fact, at some point after you introduce yourself, most people will ask “So what do you do?”. This is your opportunity to let them know about your startup, and the role you play in it.
Don’t ask about funding yet, though. Ask to connect with them (either on social or by exchanging emails or business cards), and leave it there.
Your opportunity to ask for a pitch meeting will come later (check out step 5 in guide to managing an investor pipeline for more details).
3. Start With Your Existing Network
The best place to start in your networking journey is with the network you’ve already built.
Jump on LinkedIn (or pull up your Rolodex if you’ve still got one of those bad boys) and get things started.
- Put up a post announcing the fact that you’re seeking funding and that you’re looking to develop investor relationships.
- Message friends or old colleagues who’ve gone through the funding process before and ask them about their experience.
- Reach out to any investors you might already know and invite them out for a coffee.
The idea here is that you’re putting the word out that you’re interested in meeting and speaking with investors. Sharing this knowledge is likely to produce at least a recommendation or two, or perhaps even a warm introduction.
4. Turn Up On Social Media
Social platforms like LinkedIn and Twitter are goldmines for connecting with investors.
The key is to do this in an organic manner.
Remember, you’re not the only founder out there looking to network with investors, and most people’s approach is to invade investors’ DMs with templated, impersonal messages.
Don’t be that guy.
Do these two things instead:
- Regularly post content relevant to your industry, and to startups in general.
Create a presence on platforms by positioning yourself as an authority. Engage with those who are commenting on your posts. Engage with other founders’ content.
Your network will grow naturally, which will organically put your profile in front of more investors.
- Engage directly with the investors you’d like to form relationships with.
- Make a list of investors you’d like to connect with.
- Follow them on social media and check their profiles every day.
- Engage with their content in a purposeful way (add value to the conversation where you can).
- Engage with others who are engaging with their content.
Once you’ve had a couple of back and forths with an investor on their own posts, fire them a contextual message to begin a more personalized conversation.
5. Have A Presence In The Real World Too
The great thing about networking on social media is that it’s super accessible.
But with accessibility comes saturation, which means it can be a little tough to cut through.
You should supplement your virtual networking efforts with some real-life, feet on the ground, old school hand-shaking.
- Attend conferences, trade shows, and speaking events.
- Make an effort to introduce yourself to as many people as possible.
- Consider getting a booth or obtaining a speaking spot yourself (this can be a great way to get others to approach you to start conversations).
If you’re meeting other industry experts and founders, ask them about their investment journey. Through this process, you may be able to identify opportunities to get referrals or introductions.
6. Take Advantage Of Existing Communities
One way you can kickstart your investor networking journey is to take advantage of the communities that already exist.
There are a number of founder communities on Facebook, for example, as well as dedicated sites like AngelList, CrunchBase, and FundersClub that aim to connect investors and founders.
Use platforms like these to build a list of potential investors, and then…
7. Build An Investor Pipeline
Networking isn’t just about meeting investors, it’s about nurturing those relationships through a series of interactions.
The best way to do this is to take a methodical approach similar to that of a salesperson.
That is, you build a pipeline of contacts, design a process of communication, and then nurture each “lead” through that process.
Learn more about investor pipelines here: How to Build Your Investor Pipeline (+ Free Template).
8. Have Your Elevator Pitch Ready
Here’s the thing:
Investors are busy people.
They’re interested in networking with founders, yes (they need to in order to do their job well). But for every one of them, there’s a thousand of you.
So, when an investor enquires about your startup, you want to get the point quickly.
The way you do this is through your elevator pitch, a 30-second intro to your company that describes:
- The problem that exists in the marketplace
- The solution your company offers
- Your company’s core value prop and/or differentiator
9. Take Advantage Of The Reciprocity Principle
This one’s really a tip for networking in general, but it applies to investors as well.
The reciprocity principle is pretty simple:
In social situations, people are motivated to give back what we receive from others. You see this in action with favors and compliments, as well as in more advantageous situations like social introductions.
But the reciprocal action doesn’t have to be an exact match.
Robert Cialdini, author of Influence: The Psychology of Persuasion, relays a story in which unknowing study participants who are given a can of Coke by a stranger are more likely to respond positively to a favor request from that stranger some time after.
So, if you’re looking to form a relationship with an investor, consider what you might be able to do for them, and then use this to leverage the reciprocity principle later when you ask for a meeting to pitch to them.
10. Do Your Homework On Investors
Our last tip for networking with investors is to realize that no two investors are the same.
They are people, true, with different interests and passions (which may allow you to form a social connection outside of the commercial world), but they also have specific interests or preferences when it comes to investing.
This extends beyond preferences such as funding types and preferred industries, and into things like communication preferences.
For example, some investors want to know up front a ballpark funding figure you’re looking for. Others prefer your introductory email not to mention dollar amounts at all.
Once you form a connection with a potential investor, spend a few hours digging up as much information as possible on them.
Look at their list of previous investments, for example, and see if you can connect with the founders of those companies and ask them a few questions.
Networking, in any social context, can be a tricky exercise.
This is especially true where there is a financial intent at hand, such as when developing relationships with investors.
Of all the tips for networking with investors we’ve discussed here, the number one takeaway is to treat the process as a relationship-building one, not a transactional exercise where the investor is a source of funding and little more.
Oh, and once you do get your foot in the door with an investor, you’d better have your financials in order.
Check out how Finmark helps startup founders build accurate financial reports, forecasts, and budgets.
This content is presented “as is,” and is not intended to provide tax, legal or financial advice. Please consult your advisor with any questions.