How to put together an investor outreach strategy in order to raise the capital your startup needs to flourish and reach its full potential?
An effective investor outreach strategy is one of the most critical and pivotal parts of attempting and growing a startup business. Everything relies on it.
Whether you can get off the ground, survive, and keep on growing through to achieving your real vision will all come down to the strength of your investor outreach strategy, and how you execute on it.
You Need A Strategy
Hope is not a strategy. You need a real strategy and plan to pull this off.
You can’t just wing it. Even if you could wing it and get lucky on your first fundraising round, you have many more to go. It will set you up for disaster, and a dangerous rhythm for future rounds.
Without a well-thought-through investor outreach strategy, you will certainly be running an inefficient process. It will be wasteful, and as you grow that can be a legal liability in itself.
At best you are probably going to be fielding inferior deal terms, with the least beneficial investors. That is going to catch up with you and your business sooner or later. Those negatives will compound exponentially at each fundraising round too.
If you want to perform as a leader, business, and fundraiser, then you need a plan. You need a strategy. You’d need a better one than not only the thousands of other startups out there pitching the same investors each day but also your most accomplished competitors.
You need an overarching macro fundraising strategy for the lifecycle of your organization. A strategy for each individual fundraising round, and a strategy for each of the ways you’ll deploy your tactics and pitches.
Investor Outreach 101
Understanding how to put together an investor outreach strategy is an essential part of any startup owner. Even if you start out bootstrapping the odds are overwhelming that you will eventually raise outside capital, and that means investor outreach.
Even if you have been doing mind-blowingly well on your own, bootstrapping all the way up from nothing, and have been drawing a fair amount of inbound and unsolicited investment interest, you still need to run an outbound process.
You need to run outbound to ensure you are maximizing the opportunity. You owe it to yourself, your team, your mission, customers, and others. If you have other shareholders or co-founders beyond yourself, then this may also be a legal responsibility, that can directly put your finances and role with your own company on the line.
Any inbound interest and offers should be parlayed and leveraged into more offers. More specifically, more attractive offers, with better terms, board members, and a lot more added value. Like an auction, you’ll have a whole lot more negotiating power in this situation. Use it.
Even as you’re learning how to put together an effective outreach strategy, you might want to make sure you know how to find the right investors for your company. Take a look at this video I have put together explaining how that works.
Put Together The Best Possible Team
Running the best possible investor outreach strategy and the process relies on putting the best possible team on the job.
You may be the best in the world in your industry, technology, or knowing your customers. Even if you are, you are probably not designing, manufacturing, and selling the product solo.
Nor running every aspect of the business from accounting to legal to marketing and shipping on your own. At least not for long.
Unfortunately, all of that talent and capability may be completely wasted, unless you are able to raise the funds to support it. So, pulling together the best possible team to create and run a strong fundraising process maybe even more important than product and UX. Money can cover a lot of other weaknesses. The opposite often isn’t true.
These may end up being ongoing employees that help with other projects in addition to round after round of fundraising. Or they may be freelance, independent contractors that you just use on-demand.
These hires may include fundraising advisors and consultants, data analysts and researchers, graphic designers, marketing experts, and copywriters. Do not underestimate their value when figuring out how to put together an investor outreach strategy.
Create A Budget For It
What many entrepreneurs don’t foresee is the cost of fundraising. They think that they are just out to get money and bring it in. Well, it can actually cost quite a bit of capital invested in fundraising to close a sizable round.
There are lean investor outreach strategies and campaigns. Though there can also be more expensive paths, which can require six figures in legal fees, and close to that in marketing and promotion costs. It’s all about how much you are raising, the additional value you are getting, and the return on your investment.
The bottom line here is to recognize that you do need a budget of some level. Keep reading to find out some of the things you may need to budget for, and allocate accordingly.
Begin With Knowing The Market
Just as with strategizing your startup business, start your fundraising planning by researching and really getting to know the marketplace.
Learn the fundraising landscape. It changes over time. How bearish or bullish is the current market and outlook for it?
Who are the major players in the current financing market? Which are active or not? What types of terms are common? How does this differ by stage of funding, industry, and business model?
How is this capital dispersed across the map? Is the most desirable and best-fitting capital for your next round all in Silicon Valley? Or is it in NYC, Miami, London, or further abroad?
What types of investors are currently participating in this type of funding round? Is it angel investors? Angel groups? Or startup accelerators, venture capital firms, private equity, and corporate investors?
Know Your Target Investors
You can’t craft an effective investor outreach strategy unless you really know your investors.
This is just like the research, discovery, and analysis you should have been doing for your customers before considering marketing or even creating a product. In this case, it is investors you are marketing to, and a pitch deck, presentation, and investment opportunity that you are curating for them.
Like a B2B customer, this step of the process requires getting to intimately know both your target organization, and the individuals you are targeting and that will be making the decision to invest in you, or not.
Some of the things you want to research and know when understanding how to put together an investor outreach strategy include:
- The check sizes these investors are issuing
- The length of their fund and synergy in a timeline
- Their investment philosophy and thesis
- Their investment criteria and priorities
- References from other startups and entrepreneurs
- Past successful and failed investment
- Preferred methods of communicating
- Their personal interests likes, passions, and fears
- Critiques of past pitches versus approved and recommended pitch deck templates
Determining The Best Channels For Your Investor Outreach
Which are the best mediums for connecting with your target investors?
After completing the above research you should have a much better handle on the ideal methods of outreach as a whole and for the specific individuals, you want to reach with your fundraising pitch.
This may include:
Craft Your Outreach Messages
The next step is to craft your investor outreach messages. This in itself can require a good dose of strategy and psychology. Thankfully, the homework you’ve already done through this process should act as a good guide here.
Still, every detail can matter in your messaging and deliver from the subject lines, body, length, colors, the timing of the drop, send from addresses, and phone numbers.
This is one of the parts of the fundraising process where you could really use some pro help with crafting the most effective content. You can’t afford to burn too many opportunities here.
You often won’t get a second chance with investors, and there are far fewer investors than retail customers. And, you probably don’t have much room to test, experiment and iterate here. You really want to get it right the first time.
Creating Your Marketing Materials
Many fundraising campaigns benefit from wider marketing, branding, and PR push in tandem with your direct outreach. Learning the right ways about how to put together an investor outreach strategy will help position your startup in the eyes of prospective investors, and keep you top of mind during your raise.
Some of the most effective channels for this can include:
- Press release syndication
- Article distribution
- Twitter and other targets social media marketing
- PPC advertising
- Outdoor advertising
Creating Your Pitch Deck
Of course, the pitch deck is the core of fundraising. It is often the most pivotal part of the process if you can position it right, and get it into the right hands at the right moment.
Pitch deck creation is a whole other book and strategy of its own. There are several ways to approach this and execute it. The best hack being to simply plug in a proven and recommended pitch deck template.
The overarching theme here is to keep it short, simple, clear, and actionable.
Once completed, you will host your pitch deck in the cloud, so that you can share links to it with prospective investors.
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.
Create Supporting Documentation
The fundraising process requires more than just a great pitch deck and some strong cold emails.
Investors will expect your deck to be backed up with your business plan, your latest investor update, and other material. Before closing the round and issuing the wire transfer they will also need to complete their due diligence. Make sure you have all of this additional documentation and data ready to go as well.
All of your pitch decks and supporting documents should be uploaded to your virtual data room for controlling your information and ease of use.
Unleash Your Investor Outreach Strategy
You can have the best strategy, amazing materials, a big budget, and an awesome product and business model, yet have it all lead to nothing unless you put your investor outreach to work.
So, do your research, get your materials together, get your team organized, and hit the ground running. Just get it working.
Start Taking Meetings
Get ready to turn your outreach into live meetings and pitch presentations. You may need to go through a lot of them to get your first yes and dollar. Including second and even third meetings with the same investors to get an answer.
Even the best entrepreneurs have often had to deal with dozens and even hundreds of rejections after their pitches. That’s out of the investors they have moved to the meeting phase from their outreach efforts.
Make sure that you are mentally prepared for this when you’re figuring out how to put together an investor outreach strategy.
Track & Measure Your Performance
Track, measure, and compile all of the data you can on your outreach.
As you can, keep tweaking and leveling up your performance during the process. Improve your email open and click-through rates. Tweak your pitch deck for more and longer views, and resulting contacts.
Then log your results for your next campaign and regear to start raising immediately.
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