One challenge startup entrepreneurs face is funding. Insufficient funding makes it difficult to scale a product and drive more profits.
A good way to draw investors’ attention to your startup project is to contact them and let them know what you are doing.
The sad truth is, if every startup entrepreneur received funding the first time they contacted an investor, the world would be a much happier place. Gordon Miller would say that out of 1,000 emails he receives, only about 5 ever progresses to become deals. What happens to the other 995?
Emailing a potential investor is a lot like making a pitch deck except the receiver is not looking at you, and they could be in any mood while reading your mail. You want to create the best impression about yourself and your business idea. The sooner you capture their interest, the better.
When you email potential investors (emails are a lot less intrusive than telephone calls) about your startup idea, these 5 tips will help you ensure your emails receive some consideration at the very least, instead of ending up in the trash folder. The rest will depend on how solid your business proposition is.
Investors are people, too. They have feelings and emotions as much as anyone. So be polite in your email. It’s not just because you are asking for something, it’s a simple rule of courtesy when you communicate with other people.
One sentence phrased the wrong way could change a person’s mood and ruin their whole day. Being polite does not mean you grovel. You can sound confident without being brash, polite without begging.
Remove the hype
As a startup founder, it is understandable to feel like your tool is the next Facebook. When you contact a potential investor, however, you need to drop all the hype. Investors don’t want to hear about how your tool is the best thing since microwaves. They want to know exactly what your product is, without the hype.
A “city directory application which lets people locate any service/business within 60 seconds” sounds much simpler and better than “a next generation, game changing internet protocol for businesses and xyz”.
Show you did your research
Different people may vary in their opinions on this, but I feel if you show you did your homework on the investor, it would help create that human feeling and tell the investor you are serious.
Let the investor know you did your research on their investment patterns and you believe your startup is worthy of their consideration. Gordon Miller, for example, makes it abundantly clear he does not invest in real estate startups. If you contact him with such business idea, he may respond out of habit but it does not guarantee the response would be what you hoped for.
Be clear about what you want
The most common mistake startup entrepreneurs make when they contact other people is the inability to state clearly what they want the receiving party to do.
When you fail to state what exactly it is you want, the person reading the email could be at a loss about how best to respond. Remember these are busy people who have their daily routines. If your email leaves the reader thinking too much about what you want, the email is most likely to end up in the trash folder.
Be specific about what you are offering in return
This is another detail founders fail to omit in their email to investors which often results in a turndown.
Look at this way, you are asking a business person to spend some time looking at your business idea and to consider that idea for investment. There has to be something they will get out of it. If not, why should they spend their time looking at your proposal instead on doing any number of other things? Jimmy Wales put it like this:
I often get long tedious emails from people explaining to me in great detail how I can help them, how great it would be for them if I would work on their project with it, or endorse it, etc. But they fail to consider my context – why should I care, and even if I do care, why should I act on this rather than any of a thousand other things.
The above tips do not guarantee you will receive the response you want but your chances will be better than when you don’t follow them.
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