There are basically three ways that founders can get in contact with an investor (or vice versa): 1. the investor reaches out to founders, 2. someone from the network makes an introduction or 3. a founder reaches out to the investor directly.
We’ve run the numbers for ourselves and of all our current portfolio companies (over 80 that is), more than 80% (!) somehow came through our network, i.e. our portfolio companies, our LPs, a friendly pre-Seed fund or someone else we knew introduced us to the founders. In less than 5% of the cases we invested after founders reached out to us without any previous connection (i.e. cold approaches).
As you can tell from our internal statistics, the approach via your network is statistically speaking by far the most likely to lead to an investment. However, Venture Capital is all about “finding the needle in the haystack”, hence we value any connection equally, no matter how it was established in the first place. After all, we’re trying hard to beat the odds and that wouldn’t work if we only followed statistics! 😉
This is why I created this quick overview on how you can get in contact with us without a prior connection. We love to hear from talented founders, no matter where you are based and how well you are connected to the “established” ecosystem players, especially if you have solid industry expertise or previous entrepreneurial experience.
1. We reach out to founders
Obviously the best way of getting in contact with us is if we approach you, because it means that we’ve either heard great things about you or that you’ve chosen an attractive market that we’d love to invest in. Within our team we define:
- industries that we think are particularly prone to be disrupted, and
- technologies have a strong disruptive element.
Based on that research we then go on the lookout for startups that are active and operating successfully in the respective field. When reaching out to founders with this approach, my email headline will say “Speedinvest loves your business” — so look out for those emails 😉.
Generally: great if this happens to you as we sincerely mean it, but don’t wait for it — please don’t be shy and reach out to us!
2. Our network introduces us to founders
As mentioned, at Speedinvest we believe that awesome founder teams don’t necessarily have to be part of the startup network in Silicon Valley, Berlin, London and the likes. That being said, an intro is valuable for us mostly because it means that you can sell your business to other smart and trustworthy people: the person making the intro obviously believes in you or your idea, which means the first validation step is already done even before our first touch point.
Who can you ask to make an intro? This intro will most likely come from one of your first investors, an advisor, a new investor looking for a lead or co-investor or your friends in the startup community, like fellow entrepreneurs that may have received an investment from us already. I’ve had founders asking me for intros to other VCs after only having one call with them. While I understand their sentiment, I will probably not be able to do this: reputation is especially important in the VC business, so you want to treat fellow investors respectfully and not waste their time with meaningless or “bad” intros (this is a huge topic in the VC industry, read more about intro etiquette from high profile VCs such as Mark Suster or Fred Wilson).
Awesome if you have this kind of network, especially because these are probably also all people who can give you helpful advice on how to build your company in an early stage already. But we’re just as happy to speak to you if you don’t know anyone in our network. So, how do you leverage the third, pro-active (cold) approach?
3. Founders reach out to us
We receive around 50 pitch decks per week at Speedinvest that we can review, and one of our policies is that we want to provide useful feedback to everyone — especially to those startups and teams that we don’t end up investing in. This uses a lot of our time — but we still do it, because we believe this is valuable to the founders and often our feedback is not definite but may change as the company progresses. However, in terms of mutual respect, we generally appreciate if founders take some time to review our investment strategy and current portfolio before contacting us. Maybe you even read a blog post from Speedinvest and already know everything about our investment process and investment hypothesis 😉.
Research and preparation in advance will allow you to:
- save time because you’re contacting an investor that actually invests in the stage and type of business that you’re building. Unfortunately, too many founders contact us obviously without any idea of our investment thesis.
- approach us with a very targeted and customized message why you are the right fit for us. You’re probably doing this when reaching out to potential customers, so why not use the same approach for your prospective investor?
- avoid situations where we’ve actually already invested in a potential competitor. Although we’re generally transparent about this and immediately flag potential conflicts of interests, you don’t want to waste your time approaching and pitching to investors that are simply not able to invest in your company.
Kicking off and organizing your investor outreach is a topic for itself, so I don’t want to go into details about this here. Mathias wrote a great blog post on preparing Series A fundraising, and you can find helpful recommendations on structuring your outreach there (also for earlier investment rounds). In terms of channels though, there are 3 important ways of getting in touch with us:
- Find the investment manager (Associate, Principal or Partner) that focuses on the kind of startup that you’re building. You can usually find the portfolio companies which these investment managers are responsible for on the website or their LinkedIn. At Speedinvest we have several focus topics (most of which have their own dedicated funds): from network effects, FinTech, Industry 4.0 to DeepTech, but we can invest in any startup looking for Seed investment in Europe. For me, that focus would be businesses with network effects (anything around “marketplaces” or platform businesses — read more on our investment hypothesis here). If you have a different focus, you can find the right people for your startup by looking at our team page. Most VC funds (like us) have standardized this process though, so it’s just as effective (if not more effective) to go via channel 2:
- The application form on our website: www.speedinvest.com. Our whole deal flow is centralized, i.e. whether you were introduced to us, we’ve met you at a conference, you messaged us on LinkedIn or you used the application form, every company ends up with one owner (i.e. investment manager). This ensures that the investment manager you’re receiving feedback from has the capacity and especially the right expertise to provide valuable input to you and make a knowledgeable decision on whether it makes sense to continue our investment discussion at the given stage. It hence often does not pay to reach out to several people at Speedinvest, which only creates overhead for both you and us.
- Conferences are a great way of creating deal flow for investors, because it allows to meet a lot of founders in person in a very short period of time. However, I’ve often observed that founders that don’t yet have a product ready for investment participate in conferences. One recommendation for them: be wary of your time. Especially at the early stage you should be spending time building your product and talking to your customers. Of course, it can be helpful to establish connections to potential investors early on, but be aware of the time that you spend on this. Only go to conferences if you have a clear goal in mind and the conference can actually serve that purpose. Here are a few selected types of conferences that make sense to visit from my point of view: conferences that center around a very specific topic (like getting valuable insights into building marketplace businesses at our marketplace conference), industry conferences where your customers are at (e.g. ITB for startups in the tourism sector), or conferences where you’re interested in getting in contact with the participants (because there is a meeting app and/or list of participants and you know you will actually be able to talk to the people you’ve identified in advance).
This post is part of a 4-part-series on the investment process for early stage startups. Read the second part here to get insights into what happens when you’ve managed to get in touch with an investor: what you should send before the first meeting and what is expected during a first call or meeting.
At an investors’ dinner a couple of months ago the host called investors “the dark side” of the startup scene. I hope I was able to bring some light to our side with this blog post. We at Speedinvest see ourselves as a partner to our portfolio companies and startups generally. If you have a great business that fits into our investment criteria, by now you hopefully know how to get in touch with us (hint: check www.speedinvest.com) 🙂.