From Handshakes To Investments: Proven Investor Networking Strategies For Startup Founders

When reading about the success stories of entrepreneurs and startup founders, one key underlying factor stands out. That they developed effective investor networking strategies. Startups working with accelerators and incubators get off on the right foot because they get access to investor networks.

But not everyone has that edge. Bootstrapping is undoubtedly successful, with many founders building companies using their own savings or funding from family and friends. At least 35% of small businesses start with just $5,000.

Statistics indicate that 90% of ventures are successful, but the problem is that 50% of them close down within 5 years. And 38% cite the lack of adequate funding as the reason.

Funding is the lifeblood of any venture that sustains it beyond that crucial first year and through the next five years. However, acquiring that funding isn’t exactly easy. Close to 500,000 new companies are established each year in the US. But less than 6% attract funding.

To get that funding, you’ll need to connect with investors and build connections. Forging robust relationships within your industry and community makes the ultimate difference in the startup’s growth and sustainability. Or failure.

Read ahead for in-depth information on how to use investor networking strategies to ensure success for your fledgling company.

Maintain a Broad Perspective for Long-Term Growth

Founders pressed for time and bandwidth typically restrict their networking efforts to a limited group of people. Understandably, they’ll want to target only potential investors from their industry who might be interested in pre-seed funding.

This is why you might think about passing up on venture capitalists who offer series A, B, C, and subsequent funding rounds. Don’t make that mistake. Put a strong emphasis on the long-term growth of the company and the possibility of connecting with these investors in the future.

Keep in mind that the venture capital industry valued at $63 Billion as of 2022. Experts estimate that it will grow at a CAGR of 20% through 2027. Close to 1000 active individual venture capital firms operate in the US.

Building relationships with VCs and angel investors at this stage will ensure you get on their radar when the business is ready for more finance and expertise. You could also get access to people in their network who are interested in providing seed funding to promising startups.

Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

Identify Your Networking Goals and Plan Strategies

The most effective networking strategies start with a clearly defined goal and a carefully-devised plan for how to get there. The objective here should be to connect with the influential leaders in your space who can expand your network.

Acquiring industry expertise, mentoring, funding, guidance, and technical know-how with the opportunity for mutually beneficial partnerships should be the end goal. Be open to contacting people and attending virtual and in-person events and polish your communication skills on both fronts.

While funding for the venture is an obvious target, attracting interest in the company and recognition for your business idea is also a win. Crunchbase, AngelList, and FundersClub are some of the best platforms that connect entrepreneurs with investors.

Target Existing Networks for Startups

When setting out to look for networking opportunities, look for remote or in-person events you can attend. Connect with people in your industry or entrepreneurs like yourself looking to build on an interesting business concept.

Reach out to family members, colleagues, friends, and people you knew back from your alma mater. Also, look for people who might share your hobbies, personal interests, and professional competency. Tap into diverse backgrounds, geographical locations, and age demographics. If not investors, you could find customers interested in your products and open to crowdfunding the project.

A good place to start implementing investor networking strategies is LinkedIn. Create a robust professional profile highlighting your achievements, educational qualifications, and experience. Potential investors doing their due diligence are likely to check out your background before offering funding.

Use Social Media Platforms to Build Relationships

Contacting investors via professional social media platforms is a great way to approach them. But, without the right strategy, you’ll come across as one of the hundreds that regularly DM them. Stay away from crafting templates and copy-pasting into your messages.

Instead, develop an organic plan of action. Start by creating an authoritative presence on the platform by regularly publishing posts. Each post has to offer value with in-depth industrywide information about new products and technology.

Follow the investors you’re targeting and comment on their posts. Connect with your followers by responding to their comments. In this way, you’ll build a network of like-minded people sharing ideas and resources.

Once you open communication lines and develop familiarity, reaching out with a personalized message is likely to get positive results. Establishing yourself as an entity worth connecting with is the key here.

Aside from LinkedIn, the holy grail of startups, you’d want to check out Facebook, Meetup, Twitter, Medium, and Instagram. As outlined earlier, LinkedIn is excellent for posting resumes and providing professional information.

Facebook has several groups of entrepreneurs and allows for the exchange of information. Posting requirements for funding could help you connect with the right investors. Of course, if you’re looking for updated, groundbreaking industry news, Twitter is your go-to source.

Another platform that has been making waves on the virtual networking landscape lately is Professional Ask, an Upstream banner feature. Founders access it for their requirements ranging from seed round funding and technical assistance to talent procurement for their company.

Make Waves in the Real World

Building a presence in the virtual world is a great start, but you’ll also get down on the ground. Put in a little effort for some conventional handshakes. Attend conferences, trade shows, and other events organized in your industry.

Do research on the attendees and speakers and spend time mingling and introducing yourself. Zero in on industry experts and successful founders and strike up a conversation.

Be genuinely interested in their startup journeys and ask questions to engage them. Making the right impression can open up doors with referrals even if funding offers don’t come in right away.

Getting a booth to get exposure for your startup and its products is another of the best investor networking strategies. Entrepreneurs with great speaking skills can consider obtaining a slot to demonstrate their expertise in front of an industry-specific audience. This strategy opens up lines of communication and builds connections.

Focus on Developing Relationships

The end goal when interacting with investors is certainly to get their money. But when initiating communication, your objective should be to build relationships. Pay attention to what they have to say and restrict the shop talk.

Do the research beforehand and get some background information about the investors and their interests. Also, develop an overview of the typical startups they’ve supported in the past and the industries where they operate. Finding out about their preferred communication channels is one of the most effective investor networking strategies.

Meet people just as you would at any other social event. The information you’ve collected on them will act like an icebreaker and conversation starter. Exchange business cards and have conversations about what they do and their interests.

At some point, you will be asked the same question. That’s your cue and the ideal moment to talk about the business concept you’ve developed.

Remember not to jump right in and ask for funding. Instead, suggest emailing or connecting on social media. At least 98% of marketing experts suggest building relationships with customers before pitching products. Similarly, treat the strategy as customer lead generation instead of an investor opportunity.

The actual funding transaction should not be the objective. If you get referrals and recommendations out of the exercise, consider that a win. Remember that investors giving you their money need assurance that they are backing a viable proposition.

Networking is only one of the fundraising strategies entrepreneurs must deploy. Looking for more information about how to find investors for your startup? Check out this video. You’re sure to find it helpful.

Be Prepared with Your Elevator Pitch

Regardless of whether founders interact with investors in-person or virtually, they should always be ready with an elevator pitch. In other words, you should be able to talk about the business concept and make the necessary impact in under 30 seconds.

During this time, be ready with the problem the market is facing, the solution your company offers, and the differentiating factor. Also, prep for talking about core values and what sets you apart from the competition.

The pitch should be concise, succinct, and delivered in easy-to-understand terms. If needed, rehearse before family and friends multiple times until the pitch rolls off your tongue smoothly. While you’re at it, also prepare for any quick questions investors might ask you.

Practice pitches of multiple durations. The 60-second pitch is appropriate in a crowded networking event when you don’t have much time to create that impression. But be ready with a one-minute and three-minute version also. If the investor seems interested, you can present a more elaborate talk.

In more casual situations where people are relaxed, dive in with longer versions providing detailed information about the company and your role in it. Project the business idea with complete assurance about its potential. Your enthusiasm will shine through, and it is not unusual for investors to bank on the entrepreneur rather than their proposals.

Being prepared with the asking amount or the approximate funding you need is a good thing. You could respond with a ballpark figure, but giving out dollar amounts is best left for the introductory email.

Nurture Investor Relationships

Executing investor networking strategies comes with a long-term perspective. Building connections takes consistent effort to ensure they last. Maintain contact with a quick email or text message and call if it seems appropriate. Ask how they’re doing or talk about the weather or sports.

Organize coffee or meet for lunch or dinner. Also, make it a point to attend events where targeted investors may be present and invite them to events you organize. Sending holiday cards and links to articles and industry news features also helps nurture the relationship.

Such tasks require time and sweat equity, but they indicate that the connection is valuable to you. Eventually, your fundraising efforts will be successful.

Be Persistent with Your Investor Networking Strategies

Acquiring investors for a startup takes a lot of work and hits and misses. Expect to learn from your mistakes as you go along until you develop the perfect strategy that works. The critical buzzword here is persistence.

Successful entrepreneurs talk about the thousands of times they heard the word “No!” until the final “Yes!” Having the right tools and approaches does not always work, and your efforts could end up in failure.

Treat each failed strategy as a learning curve driving you to perfect the pitch and technique. Don’t be afraid to step out of your comfort zone and dive headlong into untested waters. Evaluate each failure and work on what you can do better the next time.

Look for other opportunities, investors, and channels you can explore. Ultimately, you’ll hit upon the winning strategy that will get you the funding needed.

The Takeaway

Getting funding for a startup is a long and difficult road. But yours could be one of the 20,000 to 30,000 new ventures that attract investor interest. The key focus should be on building relationships and connections before delivering the ask.

Do your homework and learn everything about the target investor before formulating a plan of action. Reach out to them using social media and make sure to develop familiarity before pitching your business idea.

Developing a robust and extensive network of people will not only assist you with getting seed funding but also in further funding rounds. Stay focused on the long-term growth and sustainability of the company and on acquiring more substantial funding rounds down the line.

Most importantly, don’t restrict your efforts to the niche you serve. But also look for complimentary industries where your idea could attract investor interest.

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