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Neil Patel

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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.

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    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.

    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.

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    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
    • Blogging
    • 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.

    You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here

    In the video below How To Put Together An Investor Outreach Strategy I cover this topic in detail.

    * * *

    FULL TRANSCRIPTION OF THIS VIDEO:

    Hello, everyone. This is Alejandro Cremades, and today we’re going to be talking about how to put together an investor outreach strategy. Before we get started, make sure that you hit that Subscribe button, and this way, you will never miss out on any of the videos that we roll out every week.

    Getting out there and getting in front of the right people that are going to invest in your company and be excited about the opportunity of even potentially investing in your business that have the right type of investment theses and that they’ve been looking to invest in companies like yours is essential. You want to optimize your time—the time that it takes from getting out there to getting the money in the bank.

    In today’s video, we’re going to be breaking it down for you and giving you a step-by-step guide so that you can really get that strategy so that you know who you want to get out there and how you’re going to be closing the money that your company needs. So without further ado, let’s get into it!

    First, you need a strategic roadmap. You need the strategic roadmap that is going to allow you to understand what that process is going to look like, what is going to happen from Point A to Point C, meaning from researching the list and putting everyone together to actually getting the money in the bank. You need to design that. You need to design who you’re going to go after, what is going to happen, what are going to be all the different touchpoints, and what you’re going to be using in terms of touchpoints, and all the way to getting that money in the bank. That is the strategic roadmap. That’s something that you need to develop and something that you need to keep in mind.

    Then, also, keep in mind, as well, where you’re at in terms of the financing cycle because that strategy is not going to be the same if you are at a Seed Stage, which is the first round of financing, going after individuals mainly. Or if it’s a Series A Round, where you’re going, for the first time, after institutional investors like venture capital firms. So, again, put your strategy together as the first step in this process.

    Before you actually put the investor strategy or the outreach together, you want to make sure that you have the right team in place. Ultimately, especially if you’re in the early stages of your business, the investors are going to be investing in you. They’re going to be investing in helping you in building this company, but they’re going to do so if they see that the right people are seated in the right seats. So keep an eye out and understand what’s in the next 18 to 24 months in the execution, and make sure and guarantee to the investor that you have the right people there and that you’re going to be able to execute.

    Also, you want to create a budget for this. It costs money to raise money, whether that is flying, travel, advertising, promotion, putting together PR so that it goes in line with your fundraising efforts, and it allows you to create the storm. You need to budget, and you need to budget, too, for the designer that is going to be putting together the pitch deck template or the pitch deck for you. By the way, you can use the pitch deck template below that founders are using to raise millions all over the world. You want to budget and make sure that you have that money in place.

    Then, you want to know the market. You want to know: who are the players? Who are your competitors? Are they directly there against you or the indirect competitors? You want to know, as well, how big this market is. Who are the potential investors that make sense? Then, what is getting them excited, and what are some of the potential concerns that are out there at this moment in time?

    Then you want to know the target investors. You want to know who you are going after because you want to optimize as I said earlier, you want to make sure that you’re going after the right investor at the right time and who is going to be thrilled about hearing about your opportunity. Some of the things to keep in mind and consider when you are putting this target together are the following factors:

    • The check size that these investors are issuing
    • The length of their fund and synergy and timeline
    • Their investment philosophy and theses
    • Their investment criteria and priorities
    • References from other startups and entrepreneurs
    • Past successful and failed investments
    • Preferred methods of communicating their personal interests, likes, passions, and fears
    • Critiques of past pitches versus approved and recommended pitch deck templates

    Then you want to know, what are the best channels to get out there and get in front of these people? What are those channels going to be? Some of the channels to keep in mind and to really execute when it comes down to getting out there are the following:

    • Twitter
    • LinkedIn
    • Crunchbase
    • Email
    • Phone
    • Introducers
    • Crowdfunding platforms
    • In-person networking

    The next thing is to craft the message. You want to put together the message, for example, on your emails, whether that is the opening paragraph, the next paragraph that is going to be your background, or the last paragraph that is going to be that call to action for the request of the meeting. Ultimately, you want to put together an email that makes sense. Also, you want to craft the next messages that you’re going to be using for every step of the way when you’re engaging with those investors. But for that initial outreach, the email is critical—a powerful subject line, an email where there is a first paragraph opening up that is introducing yourself with the background story as the second paragraph, and then with a call to action to request that meeting or phone call.

    Then you want to create your marketing materials because you are creating that incredible storm. You want to get people pumped. You want to start them feeling and hearing about your company and about you every single place they go to. Some of the things that you’re going to be putting in place are the following:

    • Press release syndication
    • Blogging
    • Article distribution
    • Twitter and other target social media marketing
    • PPC advertising
    • Outdoor advertising

    Then, of course, is the pitch deck. Again, the pitch deck is critical. Don’t start from scratch. You can use the template below that founders are using all over the world. It’s for free. Now, the pitch deck is going to be 15 to 25 slides, period. It’s the storytelling and the future possibility that you’re painting out there for them to get excited. It’s that flow, that structure, the way that you’re positioning things. It’s like watching a movie. You want to leave them in a way that is moving, touching, and inspiring, and that’s what you’re doing with your pitch deck.

    Now, remember that the three most important slides based on data that investors review the most are:

    1. The financial slide—by a mile.
    2. The team slide—who is behind the team?
    3. The competition slide: the market.

    Those are the three most important slides, so make sure that you’re nailing those.

    Also, create supporting documentation. For example, you want to have your due diligence folder already created. You want to have every single document that they may want to take a look at and to validate the claims that you’re making, literally, already for them to review. So when they’re ready to dance, when they’re already interesting and ready to go, don’t become the bottleneck. Have that already in place; just create like a Dropbox folder with all your due diligence materials or like a Google Drive folder with all of those materials. Then, when they’re ready to dance, just give them the link and say, “Let me know if you have any questions.” That way, you’re not waiting for one-offs, which ultimately is going be a super painful process and is going to delay you getting the money into the bank account.

    Now, it’s time to unleash the investor outreach. Start getting those meetings. Start thinking about this as a sales process where there are different phases on that cell cycle. Never approach a first meeting with trying to get the check because, on the first meeting, you’re just going to be making a promise. You’re going to tell them that you’re here.

    Then over the course of time, they’re going to see how you execute and how you’re delivering on your promise. So your intention is not to get the money on that first meeting. Your intention is to get to the next meeting because the more meetings that you get, the more concerns that you’re able to address. And fundraising is all about addressing concerns because when there are no concerns, that means that the money is in the bank. Again, always think about this as how or what do I need to do to get to the next meeting with this investor because that is going to get you closer to the money.

    Then you want to track and measure your performance. How many of your emails are being opened? How many of your emails are being responded to? How many meetings are you able to schedule? How many follow-up meetings are you getting? Think about this as a funnel and see where you’re dropping the ball. Where could you optimize? Where could you do better things? This is all about over-performance, like thinking about how can you do better than what you were doing and how you can take things to the next level?

    Hopefully, you like this video. Hit a Like. Leave a comment below and let me know how you’re thinking about your investor outreach strategy. Also, Subscribe to the channel so that you don’t miss out on all the videos that we’re rolling out every week. And if you’re fundraising, send me an email at alejandro@pantheraadvisors.com. I would love to help you out with your capital-raising efforts. Thank you so much for watching.

     

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    Neil Patel

    I hope you enjoy reading this blog post.

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