How To Follow Up With Investors?
I received quit some questions and reactions on my previous blogpost “Are you keeping your promisses” What is the best way to follow up and in that sence keep your promisses. So I decided to dedicate a blogpost to the topic how to follow up with investors.
Here we go…
The follow up is what most often makes the difference between startups that never get the chance to spread their wings and those that thrive far past their founders’ expectations. This is especially true when it comes to following up with prospective investors and those that have already committed capital to a venture.
How should entrepreneurs be following up with potential and already landed investors as they move through the fundraising process? Knowing the why, when, what and how to follow up will help you this critical part of nurturing your startup, and will certainly make a huge impact on how much money you raise, from who, and how much they really help your vision of your venture come to life.
As I share with our members it is almost impossible to receive a check after your first investor meeting. You will need to follow up and build the relationship with the investor so that you get to generate trust and eventually receive the investment that you are seeking. This is what I call the “connecting the dots“ strategy.
This strategy basically consists on you making promises on your first meeting and following up to update the investor on how your promises are being delivered with your masterful execution. The investor will then connect the dots of the story that you initially presented and eventually if there is consistency with your follow up strategy they will step forward with a check.
Why Follow Up with Investors?
There are a variety of purposes for following up with investors. The most common is to pursue new angels and VCs for startup capital. That has its place, but fundraising can be much easier if you are following up in the pre-seed round stage and after you’ve already been funded. As described below, the process of raising a round of financing takes on average 6 months for early stage companies. In between the different phases involved as part of the process, you always want to be top of mind with investors.
In my experience successfully growing and exciting startups, consulting others through the fundraising process and investing with alongside angels, entrepreneurs should be following up for all of these reasons.
- To alert investors to investment opportunities
- To create excitement and show the value of the opportunity
- To update existing investors on the status of their investment
- To increase engagement with your brand and business
- To leverage help from influencers and experienced executives
- To build trust and relationships
When to Follow Up with Investors
Seven key times to follow up with investors are:
- To raise awareness of your startup before the financing round
- Throughout your first and following fundraising rounds
- As you secure notable investors in each round
- When you close a round of funding
- Quarterly to report updates and progress
- After reaching key business milestones
- When you make an important hire
- If you are featured in a prominent media outlet
- As your runway to the next round of funds closes in
Typically what separates you from the money is how the investor concerns that are in between are addressed. Your ultimate duty in the financing process is to address such concerns. For the most part you will be receiving the responses below after your initial investor meetings. Founders make the mistake of taking these comments from investors as rejections and they give up on building the relationship. What investors are in the end doing with these comments is extending an invitation to follow up in order to address whichever concern they shared during your exchange.
How to Follow Up with Investors
There may be some exceptions, but in almost every case for right now, email is always the best bet.
The important thing here is to consider the ideal format for your potential and current investors to receive and digest information like this. Which formats and media do they like to use? Are your messages and timing respectful of their time and reflect positively on you? The slide below outlines the key elements behind a powerful update.
There may be scenarios in which voice, text, mail and social media updates are warranted. Though the majority of today’s investors are email users, are too busy for too many phone calls, and may be too inundated with social media.
Know what times and days are appropriate to land messages. Which will be helpful to them. Which may create a negative image of you. For example; trying to interrupt a Shareholders meeting to get ahold of Mark Zuckerberg probably isn’t going to get you the results you hoped for. If you know your angel investors are very family and holiday oriented, texting them on Christmas Day is not going to win you points.
Know your investors, and you’ll know how and when to deliver your follow up messages for the greatest results.
What to say to them
Obviously, there will be specific details you are delivering at each stage of your follow up. Yet, there are two considerations which should always guide you in crafting the right follow up messages.
The first is that effective fundraising typically works best with an attractive marketing strategy. You can sell hard, pitch, and hustle. That’s great. There maybe a time to show up and do that. Though in most cases any serious investor that you really want to land is already relatively impervious to cheap sales tactics. Your best bet is to draw them in. Be the entrepreneur and startup they would want to fund, and are even motivated to pursue to fund. Stand out as the one they believe is going to make it, can deliver and they want to be aligned with.
The second is to always be asking for the sale. If you don’t ask you’re unlikely to get it. Some may approach you to offer money. Though many are waiting for the ask. You’ve probably walked into a store! You went because you were interested. If someone would have just showed up, to close the deal you would have bought. Instead they dropped the ball, and lost your business. Don’t be too shy to ask for help or funding if you really have value to offer.
Follow these steps for consistently follow up with well timed investor follow up messages and you’ll dramatically increase your odds of raising the funds you want, round after round, and on the best terms possible.
Do you already have a strategy how to follow up your investors? Need some support with that? or reminder please leave a comment and I will send you a FREE infographic how to follow up with investors.
Did you find this information valuable to you?
Thank you in advance for sharing your thoughts.
Your biggest fan,
Jeroen van der Heide Co-founder & Ecopreneur
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