The Three Most Common Mistakes Entrepreneurs Make When Emailing Venture Capitalists
The emails founders send potential investors can be the difference between getting millions and getting nothing.
One of the things nobody warns entrepreneurs about when they start fundraising for their startups is how many hours they’ll spend writing emails introducing themselves to venture capitalists. To give a rough estimate, I spent 15 years fundraising for venture-backed tech companies and, during that time, met hundreds of investors. Most of those meetings were with investors I didn’t personally know and were arranged via — you guessed it — email. The same will be true for most founders looking for investors. At some point, if you want to successfully raise capital, you’re going to have to email people and convince them to meet with you. Do you know how to get a positive response?
By the way, in case you’ve already been emailing lots of investors and getting responses, the key distinction here is a **positive** response. In general, investors are good at responding to random entrepreneur emails. After all, talking with entrepreneurs is a critical and necessary part of their jobs because, if they ignore entrepreneurs, they don’t have deal flow and don’t have companies to invest in. In other words, getting a response from an investor isn’t the same as getting a positive response. Investors know how to respond to entrepreneurs in ways that are polite but not necessarily an indication of their willingness to invest.
For example, when you email an investor, and that investor connects you with an associate at the firm, that’s a response, but it’s not positive. Associates, for those who don’t know, are like baby VCs. They’re like temporary interns interested in careers in venture capital, and VC firms use them to run interference for their general partners (GPs). In other words, VC firms have associates meet with the random entrepreneurs who email them so the GPs — the actual decision makers — don’t need to waste their time. Sure, on rare occasions, associates identify a company worth elevating to the GPs, but, in general, once your startup gets routed to an associate, your chances of raising money from that firm have basically dropped to zero.
Are you starting to appreciate the difference between a response and a positive response? As an entrepreneur, you have one chance to make a good first impression with a potential investor, and that usually happens with your initial email. To avoid looking like bad investment, here are the three most common mistakes entrepreneurs make in their initial email outreach to VCs and how to fix them.
Mistake #1: Pitching your startup
Without a doubt, the biggest mistake entrepreneurs make in their intro emails to investors is that they try to use their first email as a way to pitch their startups.
NEWS FLASH: Email is a terrible way to pitch a startup. It doesn’t matter if the person writing the email is the second coming of Shakespeare, nobody is good enough with words to convince someone to invest millions of dollars via email, so don’t try.
Instead, reframe the purpose of your first email. The goal of emailing a potential investor for the first time shouldn’t be to convince that investor to write a check. The goal should be getting that investor excited enough to want a meeting. That’s it! Save the pitch for the actual meeting.
Mistake #2: Not including any “sizzle”
Fundraising is a type of selling, and every good salesperson knows to “sell the sizzle, not the meat.” It’s a shorthand way of reminding salespeople that, even though customers ultimately want value from the things they buy, when they’re getting interested in a product or service, sexiness and excitement is what initially attracts them.
The same is true in fundraising. Yes, a VC isn’t going to invest in a startup with poor fundamentals. But VCs agree to take meetings with startups based on whether those startups seem interesting. That means emails to VCs should focus on fundamentals. They should focus on making your startup seem interesting. Do this by starting the email with the “sexiest” piece of sizzle about your company.
Here are some examples:
Hi [VC Name],
My B2B SaaS startup, [Startup Name], is six months old and already generating $250,000 in ARR.
Hi [VC Name],
My new social media app, [Startup Name], is 12 months old and has 10 million daily active users.
Hi [VC Name],
My 3-month-old IoT device just got its 10,000th customer and was recently featured on the front page of TechCrunch.
Notice how each of the examples begins by telling recipients a piece of information that would get them excited to learn more. The examples don’t explain what the startup is or what it does. They just give basic information about the type of company, how old it is, and what kind of traction it has. A good VC will quickly be able to determine whether or not a company is worth learning about based entirely on those three things.
By the way, if you read the above examples and thought, “I don’t have anything that sexy to share,” it probably means you’re not ready to fundraise. Stop contacting investors and get back to building your company until it’s far enough along to have compelling traction.
Mistake #3: Not following up
Since fundraising is a type of sales (see above mistake), an email to a potential investor is more than just a fundraising request. It’s also an example of how a founder communicates with potential customers. Knowing this, when good VCs are reading founder emails, they’re judging the founder’s potential to do the kinds of communication tasks necessary for startup success. After all, if a founder isn’t good at selling potential investors on a startup, why would a VC trust that founder to be good at selling potential customers?
Because a founder’s investor email also represents how good that founder will be at customer acquisition, savvy VCs will use emails from entrepreneurs as ways of testing them to see how effective they are at sales. And, since lots of sales emails don’t get responses, one of the easiest ways for VCs to test a founder’s ability to sell is by simply not responding to an email and seeing what happens.
Crappy entrepreneurs never send follow-up emails because they’re worried about seeming pushy or rude. Successful entrepreneurs always send follow-up emails because they know they have to be persistent in order to get customers.
Don’t be a crappy entrepreneur. If a VC doesn’t respond to your email in a few days, send another. If the VC still doesn’t respond, then send another. Keep emailing until you get a response. Or use a service to do it for you. Sending follow-up emails isn’t being pushy or rude. You’re demonstrating that you’re willing to put in the effort to make your startup successful, and that’s exactly what VCs want to invest in.
