Startup Secrets: How to Get Investors’ Attention

To secure investment for your startup, you need to think like an investor. To help you gain that perspective, TechUnited:NJ CEO, Aaron Price, chats with Ben Novak, Angel Investor and Partner at Morgan Lewis. Ben and Aaron dive into the investor’s perspective, their investment patterns, and the best way to not just secure the first meeting, but the next one.

 

Cold introductions should lead to the next meeting, not the next check
A cold introduction is the process of reaching out to a potential investor that you have never met before. This approach is common for young startups that lack a strong network. While it is a necessary approach, it can also reveal your inexperience. The good news is that using cold emails to build relationships (instead of skipping ahead to asking for funding) can lead to big-time investment down the line.

“Don’t data-drop 50 paragraphs and attachments in a LinkedIn message,” Ben advises, “Start with an introduction, and then get to the next step.” Personalize and focus on specific goals in your messages to form an initial connection.. 

Startups need to be strategic about their time. It is better to spend time building networks and deepening relationships than casting a wide net.

Take advantage of remote networking opportunities
While there is a lack of in-person networking events, the world is opening up through virtual events.  Because physical location is less of a barrier, you can get access to more exclusive meetups outside of your area. Don’t forget about the benefits of building local networks, though: search for regional trade groups such as TechUnited:NJ for localized connections.

Warm introductions help because they act as a natural filter for potential investors. Referrals are pre-screened by the people who know investors best. Those connections already know if your startup will be in investors’ field of interest. Remember to utilize the networks you have already built while building your business as well. Introductions from service providers such as lawyers and accountants can get your foot in the door.

The diligence process is getting faster for investing
Because of a global increase in remote work, the diligence process for angel investors has changed rapidly in the past few years.  As a member of the investment group Delaware Crossing, Ben explains their process. First, prescreening occurs from the screening committee with a phone call. Then, the more detailed screening process occurs, where entrepreneurs can make up to an hour-long pitch. The investment group picks a group of startups once a month to receive a final round of pitches before selecting two new investment opportunities from the group. Depending on many factors, this process can take between a week and a month.

The vetting process greatly depends on where your startup is at in the  seed round. If you haven’t received any funding from other investors yet, the process will take longer. Diligence can be expedited if co-investors are big names like New York Angels or JumpStart.

Because of the pandemic, businesses are more accustomed to broadening their geography and taking meetings online. Since there are less in-person meetings, investors tend to “get down to business” quickly. If you take a deliberate and professional approach, this can be to your benefit.

Ultimately, “a diligent investment thesis maximizes returns and minimizes risk in the long run,” advises Ben. Be sure to take the extra time to build a strong network and take advantage of all of the resources at your disposal to secure key investment. 

Special thanks  to Morgan Lewis for powering this episode. Morgan Lewis is a unique law firm that has the resources of a global firm, but also caters to the needs of growing startups. Learn more at morganlewis.com

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