Are you wondering how to build relationships with investors? Winning at startup fundraising is all about building relationships with investors. How do you do it?
In fact, building relationships with a variety of investors won’t just pave the way to winning in round after round of raising funds, it will open the doors to a great exit and resources, and will make navigating everyday business easier. Especially when it comes to working with your board of directors.
So, how, where and when do you start building powerful relationships with these key players in the industry?
The best path to getting funded, and on the best terms is to start building relationships with investors far before you need them. This is equally true from angel investors and friends to fund your pre-seed round through strategics and private equity funds in a Series D round.
Many have found attending great colleges one of the best ways to build this network early. It is some of the best value they have gained from the university.
At a minimum, you want to be building strategic relationships for at least 12 months in advance. Even earlier than that is better.
So, if you are still brainstorming a startup now, and may not launch or need funding for another year or two, this is the time to begin prioritizing meeting and nurturing connections with angel investors, founders of startup accelerators, and fundraising consultants.
Do What You Say
No matter what it is, do what you say. The number one problem facing investors is finding entrepreneurs they can trust and who will deliver. Not just for being confident in returning their own money, but for protecting their own credibility and relationships if they refer you to others.
So, whether it is meeting up for coffee, sending them an update, or taking the next step in your venture, do what you say. They’ll notice.
Add Value First
Don’t sell. Focus on them. Find a way to offer and give them value long before you have an ask.
This is how you’ll earn their trust and friendship. Just make sure you are doing it authentically.
Focus the conversation on them, and listen. What are they passionate about? What pain are they dealing with? What pleasure do they seek?
How can you add value to their life and business? Don’t give to get. Just give. Even if that feeling of helping someone else is all you get, it is more than worth it.
Get To Know Them
Get to know investors as people and business professionals, over time and in a variety of situations.
Investor-founder relationships are definitely like a marriage. People can be vastly different from casual dating to moving in together and getting married. It can be totally different when you are together every day, up in each others’ business, are going through the daily grind, and so on. There is no way you can grasp this with a couple of dates where both sides are putting on their best front.
Do coffee, do dinners, go to games together, see each other in a business atmosphere. How do they treat others? How do they react when there is friction? What details of their personality and ways of operating good really grind on you after 10 years together?
Investors are a lot like cofounders. They should make the highs twice as high, and the lows only half as low. Strengthen your relationship by celebrating things together. Maybe it is a game, a small milestone in their or your business. Or maybe it is their birthday or their kids’ birthday or a holiday or special event.
Champion Hard Things Together
It’s not in the easy times that the strongest relationships are forged. It is in the toughest times. The truth is that most days of being a startup entrepreneur are going to be tough. So, you had better make sure you can work well together through them, and as a team.
Many say that team-building exercises are too fluffy and not as important as being in the business trenches together. Yet, in order to get to that point, it can help to champion hard things together.
It can be small fun wins and challenges. What passions do you share? Go learn to surf in Costa Rica for the weekend. Or climb a mountain, participate in an endurance race, go camping and build a fire (without lighter and lighter fluid), lift heavy things at the gym, or brainstorm hard projects together.
You’ll forge a new level of bond, and see how well you do as a team when things aren’t easy.
Send Regular Updates
It’s not always easy or practical to do all of the above, especially with many different investors. Especially not when you are laser-focused on building the basic foundation of a startup or are managing a hyper-growth company to scale to the next level.
At a minimum, you should be sending regular investor updates. These are typically in the form of corporate emails. Though, you can go outside the box to send warmer and more personal updates too. You can use mail, social media (the best being Linkedin), and other methods.
Remember The Most Important Data
Remember that the most important word to anyone is their own name. Remember names. Remember important dates and other names. Their spouse and kids, their anniversaries, and more.
Get Warmer Introductions
Getting started connecting with investors can be challenging. Especially, breaking through from the expectation you are just selling them to their guard being down and willing to build a real relationship. Getting warm introductions from people they already trust can make all the difference here. Who do you know that knows investors?
Remember that storytelling plays a key role in fundraising and you will need capital to scale things up. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, 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.
ACCESS THE PITCH DECK TEMPLATE