What to do if your investor outreach is not working?
While it is investors’ job to be out there finding startups to invest in, it can be a lot harder to reach them and connect with them than you’d imagine. You are blasting out your pitch deck by email, calling, filling out web forms, and searching messaging via social media platforms like LinkedIn and Twitter. Yet, you aren’t getting the responses.
Without smart document sharing tools you may not even know if your pitch deck is being viewed. Or if it is, you still aren’t seeing any inbound term sheets or bank wires.
What can you do now?
Ask If You Are Doing Enough
Pitching and getting funded is a numbers game. If you’ve caught a few episodes or subscribed to the Dealmakers Show you will have discovered that behind the media headlines, those startups that have been the most successful at raising big money have also had to pitch dozens, and often hundreds of investors to get funding in a given round. That’s not just the number of emails they sent out or times their pitch deck was viewed, but how many initial investor meetings and presentations they did.
When it comes down to what to do if your investor outreach is not working, keep in mind that in some industries, a 1% response rate is good. So, the first question is, are you doing enough outreach?
If not, get your volume up.
Follow Up & Keep Following Up
Fundraising is all about sales and marketing. That means multiple touches and connections with each prospect. You need to keep following up until you get an answer. The worst they can say is no. If you haven’t already followed up on your outreach message at least seven times you may ust not be following through enough.
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.
Ask For Feedback
If your outreach messages and pitch decks are being opened, or you have given presentations, but just aren’t getting replies or funding, start compiling feedback.
What consistent feedback and recommendations on potential improvements are you getting? What are the common threads?
What is the feedback, not just on your pitch deck, but you cover letter, other attachments, and live presentation? What is it that is letting you down?
Ask investors, friends and family, advisors, specialist consultants, and other founders who have been funded.
Re-Evaluate Your Target Investor List
If it isn’t the volume of your investor outreach that isn’t working, or the content you are sending out, then it is the quality of your investor list that is probably the issue.
Revisit your list. What filters can you edit or zoom in on to improve your odds of conversions?
- Type of product
- Check size
- Startup stage
- Market size
- Fund cycle
As part of addressing what to do if your investor outreach is not working, ask yourself what about the type of investor? Some who have hit a wall with VCs have successfully turned to strategic corporate investors, customers, and wealthy private individuals. There are also angel investors, angel groups, startup accelerators and incubators, grants, public crowdfunding and even debt financing to explore.
Split Testing Outreach Messaging
A good thing to factor in when tackling what to do if your investor outreach is not working, is that maybe your pitch deck is perfect, and your startup checks all of the boxes for investors, but maybe your initial messaging is falling short.
Maybe it is your:
- Subject line
- From email address or handle
- What people are finding when they first hit Google to look you up
- Your cover letter or DM
- The time of day or day of week of your message
Try split testing these factors to optimize your investor outreach.
Get More Introductions
It is true that some entrepreneurs have connected with famous investors via cold DMs on Twitter or cold emails. However, these are the rare cases. The exceptions. Which is why they make the media headlines, instead of the typical months of outreach and pitching dozens of investors in the process.
Cold selling anything is challenging. Even sub $100 products. It is far more challenging when you are asking for someone to trust you with millions and their reputation and career.
Beat this by getting more warm introductions. We all instinctively trust referrals and recommendations far more than any cold sales pitch. So, work on getting more warm introductions. Who do you know or can reach that knows who you need to meet and can give you a winning foot in the door?
When thinking about what to do if your investor outreach is not working, if you don’t already have introducers like this in your rolodex, go find some. They may be specialist advisors and consultants in this space, or other connectors and power networks you know on LinkedIn or from school.
Get To Work On Your Startup Business
Fundraising is challenging. It can also take a lot of time and energy from just getting to work building your company. If you have done all of the above and just keep hitting a wall after a year, then perhaps it is better to just focus on proving your venture and solution, and attract investors to you instead. If you can amass the traction and customers, investors will seek you out with offers in hand.
Hopefully this post provided you with some perspective as you are looking into what to do if your investor outreach is not working.
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.
I cover what to do if your investor outreach is not working in detail on the video below.
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FULL TRANSCRIPTION OF THIS VIDEO:
Hi, everyone. This is Alejandro Cremades, and today we’re going to be talking about what to do if your investor outreach is not working. 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.
Let’s face it. Raising capital is an art. It’s not easy getting out there, sticking your neck out, dealing with those investors, trying to figure out the strategy, and figuring out things that are working and things that may not be working. Then, all of a sudden, you’re at a frustration point. Today, we’re going to be really breaking it down for you. We’re going to be walking you step-by-step to what to do in the event that things are not working as planned. So, with that being said, let’s get into it.
Remember that fundraising and, more specifically, the outreach is all a numbers game. If you’ve listened to my podcast, the DealMakers Podcast, where I interview some of the most successful entrepreneurs in the venture world today, you’ll see that many of them were rejected by hundreds and hundreds of investors until they got a yes. In many instances, it could be even as low as 1% response rate. It could be good, depending on the segment that you’re in.
Also, what you’re going to be seeing, and a lot of people talk about this, people like Adeo Ressi from Founder Institute and other folks say that it typically takes at least 100 noes to get to one single yes. Again, it’s a numbers game, so the more people that you have at the top of the funnel ultimately, the more people that may end up saying yes at the bottom of the funnel. That’s why you want to have as many people as you can target as possible.
You need to follow-up, follow-up, and follow-up. You are never going to get an investment they want. I have never seen an entrepreneur that goes and pitches an investor the first day they meet, and then right away, they get a check. That doesn’t happen. Essentially, this is like sales. You’re never going to get your sale on day one. You need to follow-up; you need to really understand the concerns of that investor or like we were saying in sales, potential customers.
You want to be able to show them that over the course of time, you’re actually delivering on your promise, and they’re able to connect those dots until something clicks for them, and they say, “You know what? This individual actually promised me this, that, and that, and those are actually things that are happening.” That’s why every couple of weeks, you want to follow-up with something exciting that has happened with your business. Maybe there is some feedback that they provided you that you implemented, or there was some nice positive impact. That could be a great thing that you could follow up with because you’re also feeding their ego. Again, following-up is a really big deal. You can also follow-up with new team members that you included in the team – milestones on revenue and things that are adding value to the business.
Always remember that every interaction, every email, for example, needs to finish with a call to action. What this means is avoid finishing with, “We look forward to hearing from you.” “We look forward to your comments.” Finish it with your intention of getting to the next meeting: “Are you available for a quick catch-up meeting or call next week or the following?” You want to get to that next meeting because the more meetings that you have, the more concerns that you’re able to resolve. As I always say, when there are no concerns, guess what happens? Money is in the bank. That’s why you want to be top-of-mind, and you need to be following up all the time.
You need to be asking for feedback. Obviously, as they say, you need to take with a grain of salt, the feedback that you get from investors. If you see that there’s a pattern, there are certain things that are being repeated over and over again, perhaps in your story, or around how you’re planning to monetize, how you’re planning to build retention, or whatever that is. If there are concerns that are repeating, that means you need to grab them and implement them into your story so that the next time around, your pitch comes in a more powerful way toward that investor that you’re pitching.
You also should reevaluate the investors that you’re going after. Maybe it could be that, for example, you are in financial technology, and you’re reaching out to people that are more SaaS-based, or marketplace-based, or healthcare-based that are outside of your spectrum. Or maybe you are at the seed-stage level, which is the first round of financing, and you’re going after investors that are like at a Series B, which is two years before the point that you are now. Maybe you’re at a pre-revenue stage, and you’re going for investors that are only investing in companies with $5-million-plus revenues. You need to reevaluate that you’re going after the right type of investors. Creating that shortlist of investors is critical. You want to go after investors that are going to be qualified and so that you can optimize your chances of getting that money.
The different factors that you’re going to be considering when you’re putting that list of people together or when reaching out to people are the following ingredients that are critical.
- The type of product or service that you’re building
- Check size
- The startup stage
- Your market size
- The financing cycle
- The location
If you have hit a wall, as well, with the profile – maybe it’s not institutional, maybe it’s not venture capital firms, maybe it’s not private equity firms yet, or for whatever reasons. Maybe you want to shift toward angels, angel groups, family offices, or maybe even hedge funds. This is a trial and error. You need to understand: what are the investor profiles that are going to be more inclined to exploring a potential investment in your business?
Also, split testing – the actual email language that you’re using is a good idea. You want to have some data that guides you to understand what are the emails and the linguistics that are sticking better with the investor that is on the receiving end and receiving that email from you and that communication from you. Some of the things that you can do when it comes to split testing are the following.
- The subject line
- The email address or the handle that is sending the email
- What people are finding when they first hit Google and look you up
- Your cover letter or direct message
- The time of the day and the week that you’re sending the message
Try splitting those up. Test them in different versions and different options. Essentially, you’re going to be finding some data that is going to allow you to understand what message, what language is something that people find interesting, and they go all-in with that?
You also need to get more introductions. More cold emails, I’ve got to tell you, are going to land you more meetings. But more meetings don’t equal more money. Remember that we live in a world that is different from 10 to 15 years ago. Ten to 15 years ago, it was very difficult to get in front of people. It was very difficult to understand who could be more inclined to invest in your business and getting in front of them. Now, we live in a world where everything is transparent.
The world is very much connected. There are just a certain amount of degrees of separation between one another. So, the way that you want to go about it is always using the combination of strategy with psychology to get in front of investors. What I mean by this is that once you have your target list of investors that you want to go after, avoid going directly to them. What you would do instead is go to founders of portfolio companies meaning entrepreneurs that have received an investment in the last 6 to 12 months from the investor that you are targeting, and ask them for an introduction.
Remember that for two reasons, those founders are going to be very much inclined with making an introduction. 1) The pay-it-forward mentality is real in the venture world. Twelve months before, they were dealing with the same issue that you’re dealing with, which is looking for money. 2) In 18 to 24 months, that founder is going to need more money from their existing investors, so by introducing you when they know you are a clear fit with the investment theses of their investor, you are making them look good.
Ultimately, this is what I call the success and the win-win equation where you get an introduction from an insider, someone that puts you in the inner circle or gives you that instant background-relatedness or social proof with that investor that you’re looking to target. Then, for that founder of the portfolio company, you make them look good, and you increase their chances of getting a follow-on investment in 18 to 24 months whenever they need it.
Again, we now live in a world that is different. It is easier to get in front of people, and now, what is a little bit tougher is actually closing them. For that, you want to follow the process and the methodology that I teach, for example, on places like Inner Circle, which is my fundraising program where we help from A to Z with everything related to fundraising.
If you’ve hit a wall and you can’t figure out why you’re not able to get interest, to get that outreach to work in the right direction, then what you should do is stop the fundraising. Get to work; get to execute; get to build momentum on the business. And if you’re able to build something that people want to use, something that people love where your customers love you, ultimately, investors will find you.
Hit a Like on this video. Also, subscribe to the channel so that you don’t miss out on all the videos that we’re rolling out every week. Then, leave a comment below and let me know what you’re up to. If you’re raising money, shoot me an email at firstname.lastname@example.org. I will love to help you out. Thank you so much for watching.