How to find investors: Why is it that when you send an email or a message (on Linkedin for example) to an investor, they never seem to answer. Sometimes funding seekers ask around in their Linkedin groups. It just seems like everyone else seems to be in the same boat. There might be a few very good reasons. Here are some blunt answers.
1. Investors don't have extra time to waste. Time is money.
They will only respond when they are interested. Only a very few percentage of deals get funded. Very few even make it beyond this first contact, and only a very very small percentage of offers gets a response. Even when investors do respond, their messages are very brief. No time for fancy emails.
2. Your message is not to the point.
In most cases the investor can tell, from your very first communication, that you are not serious or professional. Whether you send them a teaser or an email, make your point in those few lines. Do it clearly and briefly. After two lines the investor needs to know what your deal is all about.
3. Your business is not in the sector they are interested in.
Keep Out! Don't bother me.
4. You sent them the wrong message.
Huh??? Well, first of all, in a first contact, you don't send them a business plan, not even an executive summary. All you send is a brief message, usually called a teaser, or a short resume, that describes in a few sentences what you are all about. Now think back, is that what you did? Does you very first sentence even convey the message of what you want?
5. Let me explain: Your brief message does not specify industry sector, who you are (and your team), and what you have. And,... how much money you are looking for. Investors have their limits, minimum-maximum, their favorite sectors, their preferences.
6. You are not incorporated.
If that is the case, get serious, and do it. No investor will deem you serious if you're not incorporated. How to find investors who don't require this? You will only find those in your F,F,F (Friends, Family or Fools). Incorporate online, it's easy and affordable. For example with The Company Corporation(new window).
7. You don't have a budget to raise funds.
You probably think that having a great idea, and writing a brief message in an email or on some social media sites, will turn up an investor, and that they will pay all of your expenses. Wrong. Get ready before you contact an investor. Show them that you are serious. How to find investors that are serious? Tell them that you are incorporated. Let them know that you have all of your documents lined up, ready to be sent as soon as they show interest. Invest in the process of fundraising: come up with a professional business plan. Have a website or a place online where you can show your 'stuff'. Count in 'due diligence'. Conclusion: have a budget to deliver all that.
Count in a budget for 'fundraising': incorporation, a website, a business plan, due diligence, locate investors.
8. Investors only pick the deals that they deem appropriate for their portfolio.
There is no way that they can waste time responding to thousands of messages that obviously don't meet their standards, their choice, and their preferences.
9. Investors are not 'nice people' or charities.
They are just like everyone else. Busy, picky, strapped for time, protective, and so on. They are not charities, they talk business. Being nice comes later, not when selecting deals to make their money work.
10. Investors want to see a professional management team.
If you can't show that you will implement the business, market it, sell the 'great' product or service, they will look at the next one.
11. Your investment proposal is completely unrealistic. You think you need millions, while you should start with a first round of thousands. How to find investors who will fund you millions? Start with a first round, prove that your business works, and know that several more rounds of funding are needed before you get to that point.
All communications have to make sense, to the point, direct, clear, focused, professional!
12. Your message looks ridiculous.
Some people write messages in capitals, no one wants to read that; Messages can be full of errors, spellchecker? or get some help from an editor; English can be very poor, find someone who can help; Your message does not make sense, did you even re-read it? Over-excitement: reverse effect.
13. Use the proper channels.
The SEC has put in some strict rules to protect the public and regulate the investment world. Legally you are not allowed to advertize your investment deal publicly. If you do, it may come back and haunt you later in subsequent funding rounds or when going public.
You have to deal with 'accredited investors', get introduced to them (or they have to find you), and follow the format of announcing and communicating your investment offer. In many States in the US for example, you need a 'Private Placement Memorandum'.
Now go back to some of the pages where you can list your investment proposal 'how to find investors' (link to our 'Free Listing Page) and look at some groups on Linkedin. Check the investment proposals again, knowing all of the above. Look through the eyes of an investor. Would you put your money in them?
Growthink's guidance to getting funded: How to find investors, really!
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Check out these curated articles on Scoop.it on Funding related topics:
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