Keeping Potential Investors Informed
The Why, What, When, and How of Startup Investor Marketing
WHY? The first thing you should ask yourself before sending an email to a potential investor is WHY you are sending them an email. Of course you want them to invest, but sending them an email asking for an investment isn’t typically the best strategy. Instead, you should have a specific goal — getting a meeting, getting a referral, getting advice, building rapport, or building confidence. Reread your email and make sure your “ask” or “goal” is very clear. Investors appreciate direct asks — be direct.
WHAT? I am a big fan of “drip marketing” when it comes to communicating with potential investors. I advise entrepreneurs raising their seed rounds to immediately determine the best investors for their Series A and begin a dialogue. Let the potential Series A investor know that you realize you’re too early for their fund, but that you were hoping they could give you feedback about your model and ask for referrals to angels who might be interested.
WHEN? Regardless of what happens you should follow up with a thank you email outlining a few of the things you’re planning to do over the next 30/60/90 days. Then every 30 days follow up and let them know if you met your plan — if not, why not — if so, what your next 30/60/90 day goals are. The idea is to build a track record of doing what you say you’re going to do with an investor BEFORE you ask him for money. When you’re ready to raise your Series A at the very least you’re going to get a meeting.
HOW? You may be tempted to send out the same “update” template to all of the potential investors you’re hoping to work with, but the reality is that if you’re doing it right the “why” should be different for each investor. If you’re following up from a prior pitch you’ll have a good idea what the investor “hot buttons” were. For example, if he was frustrated with the strange way you presented your numbers cumulatively instead of month-over-month you might want to give him a different graph (assuming other potential investors like the cumulative approach). The more “custom” your email is the more likely it is to get the potential investor’s attention and respect.
The reality is that you’re likely going to have up-to 30 potential investors that have a reasonable probability of close. Divide them into three groups A, B, and C based on probability of close — spend the most time with your A prospects, half as much time with your B prospects, and half as much as that with your C prospects. Always think first before pressing send. Make sure you know the why, what, when, and how before you do…