This is a great guide I put together with some tips, to do’s, what not to do’s, and approaches for you guys on how to contact investors by email. Because it can be really frustrating when you can’t grab someone’s attention, or no investor emails you back. So enjoy.
Before You Contact Investors
It’s very important to have everything ready before you contact any investor. Investors typically get over 500 emails a day, and probably won’t remember you the next day. So if you got him/her on the hook, you need to respond immediately. Have your powerpoint, one page summary, and complete 5 year financial projections ready. The financial projections are where you need to spend a good amount of time, since all investments are a financial transaction. EZ Numbers has a great tool for this issue, it will factor in your taxes, revenue, expenses, investor reports, founder’s equity, breakeven, etc.
check over your financials a couple times (just one salary or tax miscalculation can throw off your profit margin to where it won’t work for an investor!)
Don’t worry too much about the actual business plan yet, reality is it usually is never asked for until the due diligence phase. If you’ve got everything else ready, now it’s time for…
How to Contact Investors by Email
Email Subject Line Intro
Some of the worse emails when someone does contact investors, is that “RE: Fundraising”. Putting RE in front of your subject line does not guarantee it to be read. If anything, it makes people ignore it.
The best advice is to probably put what you’re looking for in the subject line when you contact investors. Like: Need fundraising advice, need an introduction, need a board advisor, etc.
1st Email to Investors
The general rule of thumb when you contact investors by email the first time is: if an investor can’t read your email is less than 10 seconds, then he probably won’t email back. The longer your email is, the longer it takes someone to mentally process it, and it becomes easier for them to hit the delete button. Also remember, attachments or links other than in your signature will probably NEVER get clicked.
One investor actually said the greatest email they ever got was “I’m busy. You’re busy. This what I have (described company in 3 words), this is what I need (dollar amount). Want to talk?” If you can fit it all in the subject line, do that.
Your Email Signature
Your signature when you contact investors is pretty important. Have two quick links in it: one for you, one for your company. Preferably your website, twitter, and/or LinkedIn account. This does not go in the body of the email to investors, only your signature.
1st Response from Contacting an Investor
When your investor emails back after you contact him, he has probably very quickly already established your location, industry, and is now following you on Twitter. He will either respond with a reason why you are not right for him, such as:
- I don’t invest in your industry.
- You’re not in my stage.
- Or an objection to your location.
Or, he will ask to hear more.
2nd Email to an Investor
If the investor you are contacting has said you’re not in his stage, and has not invited you to meet him at a function, then it probably won’t be worth pursuing. The other two objections commonly heard, the investor probably won’t go around, so it is a certain no go.
If the investor has emailed you back though asking to hear more, either schedule that quick call or meeting, or send ONLY a one page summary, or short powerpoint (no more than 10 slides with little content). Again, respond quickly. NO LONG EMAILS. KISS (Keep It Simple Stupid).
3rd Email to an Investor
If you’ve got a third email, or actual meeting, this is really good. This is where he’s going to want to meet you in person, and/or see your financial projections, learn more about you, etc. Just be yourself, and go make a deal happen.
And finally, here are some good over all tips for how to contact investors:
Make Your Investor’s Email Effortless
As with emailing any busy person (and investors are very busy people) if you’re trying to get in the door, you have to make it effortless for them. Your “effortless reading” email is usually not their effortless email. Save all the details. You may think they need to know all the details of your brilliantly devised plan, but they really don’t until later.
Being blunt is really important when you contact investors. You need to know exactly what you want, how much you want, etc. If you want an introduction, ask for an introduction. If you want money, ask for money.
Like we talked about in the above point, all those emails investors get contacted with, all start to blend together after awhile. And you may think your idea is very unique, but I guarantee you…investors have heard it before. So, position yourself different. Give it a different twist that makes someone say “that sounds really cool”.
Contacting Investors Is A Number Game
It’s like sales. Most sales people that you’d talk to would tell you it’s a numbers game. And it really is. Even if you’re knocking doors. You can literally count: 1 out of 10 will let you in their home. 1 out of 15 will let you do a demonstration. 1 out of 20 will buy. Investing of course, it’s a much higher amount…so you’re going to have to knock alot more doors. But if you target your investors (or in sales it would be potential customers), you’d decrease that number of doors.
Bottom line when you contact investors: be blunt, be persistent, remember investors are just people, and try to have fun with it so you don’t get bored. Good luck out there.
*Caution* There is a lot of state & federal laws surrounding the issue of contacting investors. If you are serious about fundraising, and have your referrals in hand…ready to send your first emails; it’s pretty wise to contact an attorney first.