Seed Funding for Startups

Introductions from your network

Getting a trusted person to introduce you is the golden ticket to reaching investors. Before you turn to databases, reach out to your incubator/accelerator, other entrepreneurs, and your friends. Entrepreneurs are your best bet for getting introductions, as they have likely already gone through the painful process of raising money and building relationships with investors.

Using databases

It is always better to get an introduction from a trusted person, but as many novice entrepreneurs, you might not have that opportunity right now. The other approach relies on using databases:

• Angel.co: if your company is based in the US, AngelList is the best to use as an investor source. However, outside of the US, the platform is not as popular with investors.
• Crunchbase: The second best, if not the most reliable, source to find investors.
• Linkedin: if you have startups in your industry that have raised money as an example, it is pretty easy to find their investors on Linkedin (search for the keyword “investor” on the company). However, even with Linkedin’s built-in custom search by LaGrowthMachine, it can take a lot of time to do.

Then there is LaGrowthMachine’s Angel Investor Bible: Gritt.io. It is a custom-built database of all of the above, where you can find your institutional and angel investors by country or past investments, and import the results as a CSV into LaGrowthMachine.

Don’t contact everyone, do your own research

While it is tempting to contact everyone on the list, investors hate receiving generic emails. It is important that you do your own research and check that 

• their portfolio (LaGrowthMachine’s investor Bible – Gritt.io – is excellent for that) matches your industry.
• their capital value matches your funding stage.

Reaching out to a SaaS investor if you are a MedTech will lead you nowhere. Same if you reach out to a Series B investor while raising a seed.

Combining it all together

If you use the previous databases, you will be able to create a CSV containing the first name, last name, LinkedIn URL, and past investments as custom variables that match your scope. While not mandatory, using past investments as justification variables will help you increase the response rate significantly, because it will show that you have done your own research.

Upload your research results to LaGrowthMachine. To do so, go to Leads and click on “import leads” then “import csv”.

Step 1: Warming Up Leads

Sparking an investor’s interest is not easy. They have probably never heard of you or your company. To break this barrier, you need to create proximity and first visit their profile long enough to send a notification to the lead. Then, LaGrowthMachine will “like” their latest tweet, follow them, and revisit the profile a day later.

People can’t help but be curious about who has shown interest in them. These subtle actions almost always lead to your lead checking you or your company out

Step 2: The First Hook

You have created proximity and trust with basic human interactions. Now it is time to reach out to them. Linkedin has a 300-character limit on connection requests. Your text needs to get straight to the point. We recommend mentioning:

• Selected past investments as variables – to explain why you looked them up. Investors appreciate signs that this is not a mass search.
• The funding amount and goal: to make expectations clear.
• Your best metrics showing traction: to prove you deserve their time. Avoid vanity metrics at all costs.
• To schedule a call for more information as a CTA

Your best metrics showing traction: to prove you deserve their time. Avoid vanity metrics at all costs.

To schedule a call for more information as a CTA

And what do we do if your potential investor does not reply?

Step 3: Switching to email

Despite having done great research and sent an impeccable letter, your response rate is likely to be quite low. This is because most investors feel overwhelmed on Linkedin. Fortunately, it is very easy to follow up by email with LaGrowthMachine, as you have used the enrichment feature to automatically find their email.

When it comes to email, you have no theoretical length limit, but avoid boring potential investors with long emails. No one will read it: conciseness is essential.

First, the subject line has to entice opening the sales email. Go for value: “Investment opportunity in a startup” will never work”. Arise’s interests “LaGrowthMachine – Raising 1m€ – 22% MoM, 70k€ MRR” is the perfect mix: straight to the point and providing compelling metrics to entice reading.

Now the content:

• First, mention your previous attempt to connect via Linkedin. This will provide assurance that this is not an automated email sequence. Although we all know it is somewhat.

• Explaining why you decided to reach out to them with custom variables based on their past investments. Again, to show that you have done your research and provide guarantees on the quality of your work
• Briefly introducing what your company does. You cannot do this on Linkedin due to the 300-character limit, so now is the time.
• Demonstrate that you are the best at what you do whether it is:
• Your current metrics. Pay attention to what you are going to provide. Do not forget to avoid vanity metrics at all costs.
• Social proof. Testimonials from known clients, investors, or influencers in your industry.
• Attach your deck. There are debates regarding sending decks upfront. Most investors prefer to be able to decide before committing to an exchange with you. Also, we will use that link as a personalization factor for the next email in the sequence

If you think you need more training on writing investor emails, check out Bill Wilson’s article on how to send the perfect cold email to an investor.

Step 4: So you liked my deck?

At this point, if the potential investor has not replied, it is not a good sign. Let’s assume they simply did not have the time to review or reply and send another email. This time taking into account what they have done.

This is where providing the deck comes in handy. Links and attachments we send through emails can be tracked. If the lead clicks to view the deck, it means you have captured their curiosity, but not yet their attention.

Let’s use that knowledge to our advantage to re-assure the potential investor with behavioral personalization. If we look closely at the template, we will see that we split our actions based on two behaviors:

• “Did not reply” AND “Has clicked”
• “Did not reply” AND “Did not click”

The first one allows us to write an email mentioning the deck they read as the first sentence.

Do not forget to update your leads on new engagements. You can always update the template of an email in the “Templates” tab, even after a campaign has started. Letting investors know that there are more engaged people can create Fear Of Missing Out (FOMO).

In the case of the latter (i.e., they did not click), since we know they haven’t read the deck, it will be a good idea to put it back. As we said earlier, if the invested money increased, do not forget to mention it to create some FOMO.

Step 5: Last chance

If the potential investor has not replied by then, it is very likely that they are not interested. It could also be that the investor misunderstood your deck. To make sure, let’s send one last email asking why they have rejected you. Not only is it a good way to close the loop, showing that you appreciate feedback, but it can also help you improve. And if they did indeed misunderstand some elements of your pitch, you will have the opportunity to defend yourself.