Who should reach out to potential investors?

I was recently speaking with one of our entrepreneurs about their fundraising round. The fundraising process is being coordinated by a financial advisor and we were talking about how to go about reaching out to individual investors.

There are pros and cons to having a financial advisor run your fundraising process. But that’s the subject of another post.

In this case, the topic of our discussion was who should reach out to each investor on our shortlist. When a financial advisor is running your fundraising process, there are three potential people who can perform each outreach. They are you (the entrepreneur), your existing investors (if you have them), and the financial advisor.

Financial advisors often recommend that they reach out to each shortlisted investor. After all, that’s one of the two key parts of┬átheir job description. The first is helping you build your story, presentation, and financials, and the second is reaching out to each shortlisted investor.

However, I’ve found that having your financial advisor reach out to each person on the shortlist isn’t the best approach. Specifically, sometimes the entrepreneur or an existing investor has a better relationship with a shortlisted potential investor. If this is the case, reaching out to the potential investor through the financial advisor can backfire. Here’s why.

I’ve been on the receiving end of such approaches by the financial advisors of companies whose entrepreneurs and investors I already knew. Each time this happens, I ask myself why the entrepreneur or the investor didn’t reach out to me directly. The two possible explanations are that they either don’t feel that we have a good enough relationship, or they didn’t want to spend the time to reach out themselves. Neither explanation sends a good signal.

The same reasoning holds true for situations where your investor, rather than a financial advisor, is running your fundraising process.

Whoever has the strongest relationship with a shortlisted potential investor should be the one who performs that specific outreach. That’s what the potential investor expects and meeting this expectation makes sure you start off your discussions on the right foot.


Also published on Medium.