How Do You Determine Which Investor To Contact?
Years ago,I decided I the way to achieve my career goals was working at a Venture Capital backed startup. The problem was I didn’t know any venture capitalists.
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I went on the internet and built a spreadsheet of all the VC firms I wanted to meet with and every partner at the VC firm. The next step in my plan was sending a cover letter and my resume to each partner at the firm. The hope was that I would hear back from enough VCs who would be impressed with my background and introduce me to the startups they were involved with.
So, out went letters to all the partners at Sequoia, USVP, etc. I started getting phone calls, emails, and even letters back from VC firms. One of the more amusing letters I got back was from Bill Unger of Mayfield Fund.
Bill, who was in charge of recruiting at Mayfield, wrote something to the effect of, “I am writing you back from the letters you wrote to ‘Partner A’, ‘Partner B’, ‘Partner C’, ‘Partner D’, ‘and Partner E’….”
You need to do your research before you reach out to investors.
I’d been schooled. Bill was telling me that I should have researched the appropriate partner(s) to reach out to instead of reaching out to every partner.
The good news for me was my mistake didn’t hurt me. I ended up meeting with Bill and another Mayfield partner about becoming CEO at one of their portfolio companies.
However, you might not be so lucky. It’s not that hard to figure out which partners are the right partners to reach out to.
All you need to do is look at their online bios. Usually, you’ll see what areas are of interest to them, and what companies they are investors in.
You’re looking for a match between what you’re trying to do and what a given partner is interested in investing in. You don’t want to send a cold email about your fintech startup to a partner that’s focused on medical devices.
Make your cold email short and to the point.
I remembered my cold email success when I was raising money for my startup. I also remembered to target the right investors, not just random investors.
And it worked. I was able to get meeting with investors which was the goal.
Introducing yourself and tell them what you’re doing. A key point is don’t try and sell the deal in the email.
You want to provide enough information to let them know what you’re about, but not so much that you’re trying to pitch in an email.. The goal is to get a meeting or a phone call.
So, I did something like this:
Hi Name,
My name is Brett Fox. I am the CEO of Touchstone Semiconductor.
Touchstone is a high-performance Analog IC company (think Linear and Maxim) that achieves profitability with minimal funding.
The founding team, including the design team, are alumni of Maxim. The designers average over 20 years of experience.
We have a term sheet from a very good VC on Sand Hill Road, and we are looking for an additional investor. Please let me know how you would like to proceed.
Best regards,
Brett Fox
Each sentence had a purpose. The sentences in your cold email should as well.
The first sentence was introducing myself and the name of our company:
My name is Brett Fox. I am the CEO of Touchstone Semiconductor.
The second sentence explained what we did, how to think about our company, and how we were different in a meaningful way:
Touchstone is a high-performance Analog IC company (think Linear and Maxim) that achieves profitability with minimal funding.
The two companies I referenced, Linear Technology and Maxim Integrated Products, were considered the two most successful companies in the Analog Semiconductor space. The reference to minimal funding addressed a concern that investors had about the costliness of investing in semiconductor companies.
The third sentence showed that the team was strong:
The founding team, including the design team, are alumni of Maxim. The designers average over 20 years of experience.
The final sentences explained where we were at in the fundraising process:
We have a term sheet from a very good VC on Sand Hill Road, and we are looking for an additional investor. Please let me know how you would like to proceed.
Already having one investor in the bag, especially a highly regarded VC, is a good thing. The last sentence is simply the call to action.
So what were the results of this simple, to the point, email?
It worked.
We got meetings with this simple pitch. I think we had about a 20% success rate.
Now we didn’t get an investment with this approach (the traditional warm-introduction approach eventually did the trick), but that’s not the point.
The point is you can get meetings with cold emails. Target the right investors and be direct and you put yourself in play.