Let’s say you have a list of investors who you’ve targeted for your startup’s fundraising. Some you know well and some you don’t. Some you believe are likely to invest and some you believe are less likely. Perhaps the latter group are in this position because they don’t know you.
How do you go about reaching out to these investors?
One approach is to reach out to them all at once, contacting those you know well yourself and requesting your mutual contacts to introduce you to those you don’t know well. While this approach is fast, it’s unlikely to produce the best results. The reason is that the investor candidates you don’t know well are unlikely to decide to invest if you reach out to them through a mutual contact with no stake in the fund. A recommendation from someone without skin in the game is a less effective recommendation than one from someone with skin in the game.
A better approach is to prioritize your investor outreach. First, you should approach those investors who you know well and who are likely to invest. As you receive positive responses from these investors, you should then request that they introduce you to other potential investors who you know less well.
There are two advantages to this approach. First, by having someone with skin in the game introduce you to investors you don’t know, you greatly increase the chance that the latter decide to invest. Second, independent of whether the person introducing you to a potential investor has skin in the game or not, investors are more likely to invest when there are others already onboard than when they need to be the first to commit.
A prioritized investor outreach takes more time than an all-at-once shotgun approach. However, the better results make the approach well worth it.
Also published on Medium.