Reaching out to investors, and the cold email
By Justin Hall November 21, 2014
- Some entrepreneurs think it acceptable to cold-email investors; it isn’t
- But if you really have to, here are some things to keep in mind
I’m often struck dumb at the relatively casual way some entrepreneurs – especially first-time entrepreneurs – reach out to investors.
These entrepreneurs are people who presumably live and breathe their startups, folk who have given up stable jobs, happy relationships, and something resembling sleep.
And yet in spite of the awesome, even terrifying, prospect of literally asking another human being for a cheque larger than the average person’s annual salary, some entrepreneurs think it acceptable to cold-email investors.
For those of you not familiar with the term, cold emails are either emails directed to the general address of a company (i.e. “HR[at]hr.facebook.com” or our own “hello[at]goldengate.vc"), or emails to someone the sender does not have any immediate affiliation with.
To put this farcicality into perspective, that would be like cold emailing a lawyer casually asking them to direct you to the person best equipped to get you off death row, or messaging a woman on Tinder with a marriage proposal.
And no, this is not an exaggeration; this is how ridiculous it looks to investors when you cold-email them.
I can’t stress this enough. Getting someone to commit real, non-Monopoly money into your startup can mean the difference between sleeping in a cardboard box on the floor of your office/ parent’s attic, and growing your idea into a real, living, breathing company.
You need to show that you’ve spent more than 10 seconds Google searching ‘venture capital funds.’
Simply put, if you can’t show you've done the slightest bit of research into identifying which investors to speak to, investors aren’t going to spend the slightest bit of energy reading your email.
To be clear, most investors won’t spitefully chuck your email into the proverbial bin because you didn’t address them properly. It’s simply that most investors are getting a tremendous amount of email every day, and their inboxes are the electronic equivalent of a car crash.
One day, one glorious day, I actually reached #inboxzero. It was Oct 21. October 21st. The fact that I literally remember the day I cleared out all my emails should give you an indication of how many emails investors get on a daily basis.
Because the volume of emails is so high, investors simply can’t devote the requisite amount of attention each one deserves. Instead, they are forced – consciously or otherwise – to categorise their inbox between emails that provide immediate value to the fund or their portfolio, and those that do not.
For the first-time entrepreneur, this simply means quickly showing that yours is an investable company that deserves investment. Emails that grab their attention quickly and maintain it throughout the entire email will be answered. Those that do not, won’t.
It’s not guaranteed, but by following some simple rules, first-time entrepreneurs who are raising funds can bump up the response rates on their emails.
1) Know exactly who you need to speak to: Find out exactly who you should be speaking to, and direct all your efforts on that person.
2) Get a warm referral: Determine if you have common connections with this person, and leverage those to get introduced. Ask your network, via Facebook, LinkedIn, or even Twitter. Ignore shallow connections; the person making the introduction must be a friend or colleagues, or have some other deeper connection. Being introduced through a trusted third-party is the best and quickest way to get a response.
3) Specifically address the person you’re emailing: Always have someone specific in mind when cold-emailing, and always refer to them by name. Never begin with a generic salutation, i.e. ‘To Whom it May Concern.’
4) Always get their direct email address: Never, ever email a generic address. Spend time Googling, searching, and sussing out what the exact email address is. This is tricky but the information is out there. And consider it from this angle: If you can’t find someone’s public email address, how are you going to manage a business?
5) Make the email short and sweet: If it’s a wall of text, it won’t get read. Even more than one paragraph, and it’s liable to get ignored. Make it short and sweet: Three to four sentences, tops.
6) Explain what you do in one sentence: If you can’t explain what your company does in one sentence, then you’ve got other problems. One sentence, otherwise you’re going to break rule #5.
7) Don’t worry about flourishes; focus on value: If you have traction, open with that. If you have a product, open with that. If you have an awesome team, open with that. Nothing else matters beyond the value your startup can or does provide.
8) Always include a deck or executive summary: Including this automatically conveys that you’re taking your company seriously, even if it’s still an idea. It also makes it easier to share with other decision-makers in the organisation.
9) Give a clear ask: Clearly state what you are looking for. If it’s advice, ask for advice; if it’s funding, ask for funding.
10) Provide an easy call-to-action: Make it easy for the responder to give a clear ‘yes’ or ‘no,’ and include additional information to facilitate further discussion assuming a yes, i.e. if you want to set up a meeting, include one or two specific times you would be available to meet.
Cold-emailing is not ideal. It’s too easy for emails to get lost in the shuffle, and too difficult to differentiate your email from the hundreds of others that get sent throughout the week.
But they can work. It’s just a question of doing it smartly.
Justin Hall is an associate at Golden Gate Ventures, an early-stage fund based in Singapore. A former Rakuten Network manager and scholar at NUS, he sources investable early-stage technology companies from South-East Asia. You can reach him via Twitter at @JVinnyHall.
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