Does this sound familiar?
Fundraising feels like a second job. You spend hours scouring LinkedIn, shooting off cold emails, and get nothing but crickets in return. If so, you’re not alone.
In this article, we’ll cover where to find VC investors, and more importantly, how to spark relationships with them.
And for a deeper dive, we encourage you to download the Startup Founder’s Guide to Fundraising. It includes real-life case studies from our network of founders and touches on everything you need to know to raise, regardless of your growth stage.
Warm Introductions Are Better Than Cold Outreach
You’ve probably already discovered cold email isn’t working. It was always a numbers game, but with AI-automations saturating inboxes, response rates are lower than ever.
If you absolutely had to rely on cold outreach, we recommend targeting seed-stage investment fund managers. They write checks between $250k – $1M, and often appreciate (quality) emails; their entire mission is to find and fund promising startups, and you make their lives easier by contacting them first.
But warm introductions are a much better use of your time.
Case and point: last month, we wrote about how Fresh Paint raised its first $1.65M. They generated ~160 leads by working their way through the networking grapevine. The first checks were the hardest, but just one early commitment led to twenty-one introductions that ended with investments.
A Five-Step Approach for Generating Warm Introductions
You could start by contacting second-degree connections on LinkedIn, alumni networks, or people in your personal network.
But if you’re starting from scratch, you’re better off looking in person. You can build faster (and stronger) connections face-to-face than online. Then, once you have a foothold, you can focus on booking calls over Zoom.
Find Local Networking Opportunities
Nearly every major city has organizations interested in supporting local entrepreneurship. And many of them host regular meetups just for startups like yours.
Look for:
- Business accelerators
- Incubators
- Chambers of commerce
- City or regional economic development organizations
- Pitch competitions
- Coworking spaces
- University startup hubs
- Startup-focused conferences
Build Relationships (and Contacts!)
It’s tempting to think of fundraising as a sales funnel: reach out to 100 people, get 10 meetings, land 1 check. There’s truth to that perspective, but starting there skips an important step: building trust.
After all, would you introduce a stranger to someone in your network? Probably not.
Get started by:
- Being curious about them. People love talking about themselves. Ask thoughtful questions about their lives, journeys, and unique perspectives. And it may be beneficial to avoid business conversations entirely (at least at first).
Here’s a surprisingly effective conversation starter: “What’s your favorite memory from the last year?” It’s a unique question, so it’ll take a moment for people to find an answer. But once they do, it’s an excellent jumping-off point for a conversation about what they really care about in life. - Talk about your startup like you would a friend. You should definitely have a succinct 30-second explanation of what you do at the ready, but going into “pitch mode” too soon is a mistake. Instead, talk about what’s been hard, what you’ve learned, and why you’re so excited about the business.
People are more likely to root for you if they understand why you’re doing something rather than how. - Don’t make it transactional. If your only goal is to ask for money, it’ll be immediately obvious to anyone you meet. Instead, ask for perspective, advice, and feedback on what you’re working on. It lowers the pressure and opens doors for more honest exchanges.
- Play the long game. Relationships take months, or even years, to develop. You’re planting seeds that may not bloom for quite some time. Everyone you meet is an opportunity to build your reputation as not just a founder, but as a decent, reliable person.
Keep in mind, the people you’re meeting probably won’t invest in you themselves. However, they do know people who might.
Make the Ask, and Follow Up With Intention
It’s natural to be nervous to ask for what you want, or to be afraid to “bother” people with “annoying” double or triple emails.
But how can they help if they don’t know how? Plus, they’re busy. Those extra emails aren’t a bother; they’re reminders. And if you’re nervous about bumping an email thread, try this mental reframe: “The answer is always yes, until it’s no.”
Use This Template to Request Warm Introductions
You’ll (hopefully) be sending many of these emails. When you’re finished, you’ll have personalized the approach so much that your message won’t resemble this template at all. But to get you started, here’s an effective framework:
Subject: Thanks again, and one small ask
Hi [first name],
Thanks again for taking the time to chat at [where you met], and for your encouragement. I really appreciated your perspective on [specific detail from your conversation].
You mentioned you’d be open to supporting us as we grow [Startup Name], so I wanted to share one specific way you could help: we’re starting to raise our [pre-seed/seed/series A] round, and I’m looking to connect with investors who align with what we’re building.
At a high level, we help [target audience], solve [problem], by [how you solve it]. We’ve [insert key traction milestone] and are now raising [amount] to [goal].
We’re especially looking to connect with investors who:
- Have experience in [industry/sector]
- Enjoy getting involved early and helping founders go from 0 to 1
- Believe in [your vision]
Have you spoken with anyone recently who’s actively investing and might be a fit? If so, we’d be incredibly grateful for an introduction, or even just a name to reach out to ourselves.
And of course, if there’s anything I can do for you, I’m always happy to return the favor.
Thanks again,
[Your Name]
Ask People You’ve Been Introduced to For Further Introductions
Getting here won’t be easy. It’ll take considerable effort, time spent meeting new people, and intentionality in cultivating relationships.
But this is the payoff you’ve been working toward.
You’ll discover that every message you send from this point on is monumentally more fruitful than cold outreach ever was. People trust their friends. And if you’ve been vouched for, conversations, relationships, and opportunity will follow.
Two Critical Prerequisites for Effective Fundraising
You’ve read this far because you want to meet VC investors. But we’d be doing you a disservice if we neglected to share the following:
- VCs are interested, first and foremost, in traction. You don’t have to be profitable, but you do need some revenue and/or user growth before you’ll be taken seriously. If you haven’t hit certain key milestones yet, now probably isn’t the time to be fundraising.
- Your books have to be in order to raise capital. Any major investor (or creditor, for that matter) will ask for financial statements as part of their due diligence process, which means generally accepted accounting principle (GAAP) compliant records are a must-have. Additionally, if you’re offering equity, it’s best to have accountants track cap tables on your behalf.
Interested in learning how to get your books into GAAP compliance, but want to DIY? Download our free guide here and discover how to switch from cash to accrual in just one month.
And if you’d like to know how to create financial reports your investors will love, we wrote a guide for that, too.
Ready to Raise? How Indinero Can Help
At indinero, we know what it’s like to fundraise from VCs because we’ve done it ourselves.
Since receiving Y-Combinator funding in 2010, we’ve helped hundreds of startups prepare for and successfully raise venture funding.
When you’re ready, reach out for a free consultation. Fundraising is hard enough. Don’t let messy books or missing financials get in the way of great opportunities.
