Saturday, July 2 2022

More than 500,000 companies are created in the United States every year, but even with these numbers, very few startups receive VC funding. Venture capital funding can largely depend on your investor networking skills and your ability to connect with the people who could decide the fate of your company’s future. But breaking into the network of venture capitalists is not easy. Entrepreneur communities are potentially game changers in terms of introductions; however, putting yourself forward and attending networking events can be difficult.

Before diving in, have a solid understanding of the types of investors you want to approach and research who is investing in companies at a similar stage of development. Look to make a good impression on people investing in your space and those who can introduce you, like your lawyer or banker. It is essential to make a list of your best potential investors. Building a list of people who can hook you up is also essential.

Networking isn’t just about meeting investors, it’s also about developing and cultivating relationships. Nurture your relationships through a variety of interactions. Start with a contact pipeline, design a communication process, then nurture each lead through that process.

Below are some tips for connecting with investors and ultimately securing capital.

1. Network for the long haul and launch a wide network

Network with investors and build a strong community of contacts with the long-term success of your business in mind. Striving to develop relationships with investors at every stage will pay off in the long run if you can forge a meaningful relationship with them now. Many founders make the mistake of only networking with investors who are right for them right now, because they don’t want to waste time on opportunities that won’t yield immediate results. But it is important to keep in mind that eventually your goals will be different and you will need more investors. Therefore, with the long-term success of your business in mind, you must cultivate relationships with all types of investors. These connections can be helpful, like introducing you to someone in their network open to seed funding rounds. The goal of networking with investors is a long term game. Don’t be myopic.

2. Start with your existing network

LinkedIn and corporate sites are great places to start and expand your network of contacts; in fact, networks already built are a good starting point. Post something interesting that easily lends itself to announcing that you are seeking funding and looking to develop relationships with investors. Send a message to your colleagues who have already gone through the funding process, contact investors you may know and invite them for coffee. Share your knowledge and ask your contacts about their experiences with the funding process. These conversations can produce a recommendation or an introduction.

3. Be more social on social media

Social platforms like LinkedIn, Twitter and others are great places to engage with investors. Founders looking to network with investors should post interesting industry and startup news and comment, retweet and engage with content from other founders and directly with investors you want to build relationships with. Start making a list of investors you would choose to connect with and link to them on social media and other people who interact with their content, and check their profiles daily. After an investor responds to a comment on their posts, start a more personalized conversation in a message.

4. Have a presence in life

Social networks allow for quick access because they are very accessible, but they move quickly and can be difficult to cut. Therefore, pairing virtual networking efforts with in-person networking is most effective. Attend conferences and trade shows and speak when you can at events. These are great ways to meet lots of new people at once. Introduce yourself to other industry experts and founders, and be sure to try to meet as many people as possible. Through this process, you can identify opportunities to get referrals or introductions.

5. Tap into the right communities and prepare

Another way to tap into the right groups is to leverage existing communities. For example, the investor networks and communities on sites like AngelList, CrunchBase, and FundersClub aim to connect investors and founders. Make a list of potential investors and do your homework to find out more about them. Once you’ve started engaging with an investor, make sure you’ve perfected your elevator pitch. When an investor asks about your business, you’ll want to quickly cut to the chase – a thirty (30) second pitch, briefly describing your business, the problem your business aims to solve, the solution to that problem, and how your business is unique.

All investors are people with unique interests and passions and a common interest in investing and other preferences such as types of funding and preferred industries and communication styles. Some investors want to know in advance the amount of financing you are looking for. Others prefer not to mention dollar amounts at all. Take the time to understand your audience. Look at their list of previous investments and maybe contact the founders of those companies and ask them a few questions, but always remember to be honest.

Networking is tricky in any social setting, especially when developing relationships with investors. The process is one of relationship building. Once you get your foot in the door with an investor, you’re off to the races.

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