This guest post was contributed by BJ Lackland, CEO of Lighter Capital.
If you’re an entrepreneur looking for capital to grow your business, a key part of the process is getting a face-to-face meeting with potential investors. It’s during these informal coffee meetings or full-on boardroom presentations that you get to pitch your startup and answer investor questions. The hardest part of the process? Getting that first meeting.
The reality is that, while many things have changed in the funding world, one thing has remained the same. The process of connecting with potential investors is still largely driven by personal relationships. While this process may feel unfair to the fledgling entrepreneur, it’s helpful to see it from an investor’s point of view. Equity investors get solicited constantly; countless emails and pitch-decks clutter their inboxes, and voicemails clog up their phones. With so many people vying for their time, it not surprising they prioritize referrals from their personal network.
In addition, it’s helpful to remember that when an investor writes a check for your startup, s/he
taking a significant financial risk and becoming part owners of your business. This requires trust;
having a personal referral is a good first step to help build that trust. Of course, this can pose a problem for the less well-connected entrepreneur. What if you just don’t know anyone?
While getting that initial referral isn’t easy, it’s actually much more effective than soliciting potential investors cold. If you can focus your attention on building a solid strategy for getting a personal introduction to the right investors, you’ll greatly increase your chances of success.
Here are five tips for leveraging your network to get investor referrals:
1. Take stock of your existing network
When strategizing for securing an introduction to a potential investor, the best place to start is always with your existing network. The good news: your existing network is likely much more extensive than you think. Take a step back and make a list of everyone you know—family, friends, neighbors, former schoolmates and coworkers, the parents of the kids on your kids’ soccer team. Then invite these people to join your social networks, such as LinkedIn and Facebook. Next, proactively browse the lists of “people you may know.” Once you’ve pulled together this more extensive network, review it to see who might be worthwhile to talk with in person—then invite them for a short (30 to 60 minute) coffee date.After you’ve talked with the key people you know, take a look at the networks of the people you’re connected to. Spending time talking with people that are second degree to your immediate network is a great way to expand your sphere of influence.
2. Improve your social media presence
To cast the broadest net possible when building your network, spend some time improving your social media presence, both personally and professionally. Create accurate, well-done profiles for both you and your company, and make them easy to find. These profiles can be used to showcase valuable content and participate in relevant conversations: strengthening your online presence. This will give your contacts a better understanding of what you’re doing and the value you bring. It will also give them relevant, professional content to point their connections to when they facilitate introductions.
3. Get out and meet new people
It’s easy to get sucked into the workaday world of running your company and trying to entice potential investors. In the process however, you risk narrowing your field of vision and influence. Whenever possible, try to get out of this common rut and meet new people, face to face. Seek out local meet-ups, become a mentor at a local college, and attend events that bring members of the startup community together. Getting out and meeting new people will energize you and introduce you to a broader network of people. You never know when or how these new connections might help you find the perfect investor for your startup.
4. Make it easy for people to help you
Reaching out to people you don’t know well for referrals or introductions can feel awkward. The reality is that many people are happy to help—but you need to make it easy for them. Be clear and upfront about your objectives and be respectful of their time by being reasonable about what you ask for. For instance, when you ask someone for an introduction, don’t send them a 10-page business plan with no explanation and expect them to do the work of facilitating the introduction. Instead, send a short explanation about why the person you want an introduction to may be interested in you so they can shoot off a quick email or make a brief phone call.
5. Be thankful and return the favor
Being the one asking for something all the time is no fun. Think about how you can repay the favors. When you can genuinely help others, they will be more likely to want to help you. In addition, offer sincere thanks to everyone who helps you along the way. This will help strengthen your connections, build long-term relationships, and motivate people to help you again in the future.
BJ Lackland is the CEO of Lighter Capital, an alternative-financing provider for growing technology companies. BJ has spent his career working with emerging technology companies as both an operating executive and an investor. He has been a venture capitalist, the CFO of a public technology company, an angel investor, and a senior finance and marketing leader at tech startups. Follow BJ @bjlackland.