How to Captivate Difficult Investors

Ready to see the stuff they’ll never teach you in business school?

Investors are among the most challenging to impress, gain buy-in from, and ultimately to partner with. Let’s talk about how to create a “pull” effect with them.

OK, So you’ve got a rad product.

Your team’s energized. And your startup is saddled for massive growth.

You’ve paid your dues.

You’ve weathered the sleepless nights… The 14 hour days riddled with stress and anxiety.

And you’ve powered through the sunny days, riding the waves of accomplishment.

And Today – You’ve finally got rubber on the road

Your product is in-market / on the App Store / up for sale / available to everyone.

Not only is it available – but you have real users/customers and a bright future ahead.

Your roadmap is prioritized, and you know where you’re headed with the product to ensure product/market fit is achieved ASAP.

You also know exactly what’s going to give your users that warm and fuzzy feeling as they seamlessly glide through your app and smirk.

Now it’s time to think about growth.

We’re not talking 10% growth – we’re talking 10x growth.

Arguably, the biggest benefit of the software business is the ability to [very] rapidly scale, with operational costs remaining relatively low. Investors are acutely aware of and expectant of this.

How are you going to do it?

So you decide capital partners or investors of some sort are going to be your jet fuel.

As if dealing with extremely intelligent nerds who are obsessive about your nitty-gritty metrics, your product roadmap, and expansion plans didn’t create enough pressure on you, there’s an additional thing to think about when evaluating potential capital partners: Fit.

Fit

Is this someone you want to spend more time with than almost everyone else in your life – including your family and significant other?

Are they someone who you’d hire? Are they fully aligned with your go-to-market strategy? Will they try to derail your strategies or give you carte blanche?

Don’t forget: It is your business after all – not theirs. You footed the initial investments of time and cash.

Pleasing the Needy Investor

In my time, I’ve found a few things that will help both you and the investors you’re evaluating each other for fit.

This is the kind of shit no one will teach you in business school.

[Sidebar: There’s one concept threaded into each of the following. See if you can spot it – I’ll pick back up on it later.]

Numero Uno: Network with founders

(This is a handoff recommendation from Mark Suster’s epic Snap Storms. His Snapchat story is awesome and I highly recommend it to founders – @msuster on Snap.)

Cold emailing investors is just as shitty it sounds. Investors have their guard up more than anyone.

Tim Ferriss (notoriously successful VC and angel) said on multiple occasions that there’s nothing he hates more than a cold email pitch or an unsolicited founder intro. He’s not in the minority.

Mark Suster has also made it clear that relevance with your intros is vital in getting positive responses.

Here’s how to get in touch with investors you want to meet:

1. Go onto Angel.co and look at the investor’s portfolio
2. Find companies similar to yours in their portfolio. For my company Vea Fitness – I looked at early investors in My Fitness Pal, Runkeeper, Runtastic, etc.
3. Look at the founders of the portfolio companies on Linkedin and Angel.co and see mutual connections, interests, etc.
4. Draft an email template for approaching them with a clear goal in mind/ask. Mine looks like:
   1. Sentence 1: relevance, in 1-2 lines: Tell them why what they’re doing is awesome, and relate it directly back to your biz or personal interests.
   2. Sentence 2: your 1-2 line pitch.
   3. Sentence 3: your ask “are you interested in setting up an intro call to explore each other’s businesses further?”. Or “I’m really interested in how you gained partners at VC Firm and was hoping to pick your brain since I’m pursuing investment myself.”
5. Rinse, repeat.

I used this tactic at Collision Conference in New Orleans last month. Almost immediately after returning home, one of the largest VC firms out of San Francisco emailed me, eager to learn more about Vea.

I didn’t even know them prior.

The note opened with “Wanted to reach out to you as our team here at _____ has been hearing some great things about what you have built so far at Vea Fitness. I cover health and fitness tech on our investment team, and am really impressed with the way you guys have connected motivation and tracking.” Pretty much the best outcome I could’ve asked for. 

Numero Dos: Send out a biweekly investor and advisor relations email to a small, exclusive distro (>12 people). After the first mailing, put everyone on the “to” line not “BCC”. If someone quits, give their position on the distro to someone else who is waiting to join.

I’ve only heard of this recently, but I find it to be an incredibly valuable way to keep a dialogue with potential investors, advisors, and partners.

I was recommended this by LookFar. This update allows you to benchmark your current status, talk about milestones (capital/investment, product, team, marketing), and to make asks for intros etc..

Here’s how to groom with investors once you’ve met:

My investor relations email covers (not all topics on every mailing, though – only the most relevant ones):

• Platform/app developments
• New partnerships, corporate development, marketing
• Talent acquisition and changes
• Fundraising / accelerator news
• Hurdles we hit, hurdles we overcame
• Key engagement metrics / users
• Timelines: what are going to achieve in the next two weeks, what we achieved the last two weeks
• Asks – intros, capital infusion, team/resourcing needs etc.

When that investor sees you achieving goals your team set, growing rapidly and doing your due diligence – it’s going become almost irresistible for them not to reach out, once your company starts to hockey stick.

Otherwise, you risk having those great intros turn into stale networking contacts.

After distributing my first investor relations email, several on the distro reached out and thanked me, and offered valuable recommendations – they also noted this wasn’t something they’d seen from a startup before.

Did you spot the intertwined concept in both recommendations?

Drum roll please… It’s organic, two-way communication. By using these two tools, you’re not continually trying to “pitch” people. Instead, you’re having a regular, candid conversation.

For founder intros, you’re simply networking with people who will want to share your project with their investors.

For the investor relations email, you’re creating conversation points for people to reach out and ask questions about.

Let’s be honest

Sometimes you have to play the long game.

Make meaningful relationships, have ongoing communication, and be genuinely relevant with those who you are interested in working with.

Thanks for reading.

Jonathan

 

Are there other tools you use to groom investors or partners? Please share them in the comments section.