Bulls n Bears Entrepreneurship Zone - 10 October 2019 :: How To Connect With Top-Tier Investors More Effectively

[Bulls n' Bears]

Starting a business is difficult enough, with challenges ranging from building compelling products or services to effectively finding and selling customers.

This entrepreneurial journey gets even more difficult for the founders of high-growth companies that require outside funding like venture capital to grow. Stories of anxious founders going from meeting to meeting trying to find investors are abundant, especially in markets like Silicon Valley.

According to Roy Bahat, there is a more effective way to break through the noise to find success.

Bahat, who is a venture capitalist at Bloomberg Beta, which is backed by the financial and media giant Bloomberg L.P., receives countless emails and meeting requests from entrepreneurs who are all vying for his money and attention.

Speaking recently at a Launch Accelerator event in San Francisco, he outlined a few key insights that can help startup founders go from strikes to home runs during the fundraising process. 

The secret is to view the process of getting connected to the right investors as a hierarchy, with the most effective and aspirational path being at the top.

The most basic and least effective way is a cold email to an investor. This method rarely works and requires a high degree of research and message customization. This should not be the strategy you use unless you’ve exhausted all other avenues.

Next up are introductions, specifically from a mutual contact of you and the investor. Introductions of all types are better than having none at all. However, the single most important factor in getting through to a good investor is considering who is giving you the introduction, according to Bahat.

Is the person making the introduction to the investor someone that the investor views as having a strong business judgment? If so, this positions you to have credibility and validation from a trusted third party.

For even better odds of success, identify an entrepreneur, executive or former founder in your network who has had any degree of success with making money for other investors. Get this person to provide a mutual introduction. This too can push the social proof far enough to get you a response from your target investor relatively quickly.

Now, for those of you who are well connected, comes the holy grail of investor introductions. This comes from someone who has already made money for your target venture capitalist in the past, meaning they were a founder of a successful startup or firm that your preferred investor has profited from. This will carry significant weight and will signal really strong support that you are worth taking a chance on.

Understanding the mental criteria that venture capitalists and angel investors use to prioritize the importance, credibility, and significance of your business can make the difference between getting a check issued to your company or not.

If you can nail this process, your prospects are much higher than they would be otherwise, according to Bahat. 

Undoubtedly, these things will be difficult for many entrepreneurs who are either not well connected or in markets where these key influencers aren’t within reach. The critical step for this scenario is to invest in creating these relationships well before you need to ask.

Yes, this takes time and is not easy, but neither is building a company. Effort, persistence, and fortitude are key attributes for any aspiring success story.

Finally, it should be stated that all of the above is only probable if you have a strong team, large market opportunity, and an interesting or compelling product or service that is valuable to the market.

If you don’t have any of that yet, ignore everything else and focus on building those things.-- forbes.com



 

Invest Wisely!

Bulls n Bears

 

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