How not to write cold emails to investors -- lessons from a serial founder whose companies have raised $150MM+.
TL;DR Don't chase. Be chased.
1. Don't write cold emails to investors. You automatically give the investor the upper hand by chasing them. It's counter intuitive, but it comes off as desperate. VCs write checks into companies that they have a fear of missing out, or that other VCs are backing, not those that end up in their inbox (e.g. Sacca & Pinterest: https://twitter.com/sacca/status/620344394189647872?lang=en)
2. Take the time that you would have spent emailing investors and build product. Get traction.
This works when your product is something that is B2C or a very B2B direct-sale/SaaS kind of thing. It does not work as well, IME, when you are selling something more enterprise-y or selling through a channel, where the social media and viral marketing approaches basically do not work.
We are doing an enterprise startup and as we call people in our network to see if they could use it, a few have called VC buddies and said, "Hey we're seriously looking at this product, it's really cool and we know these guys too. They haven't raised any money yet so you should look at them". This has cause us to accelerate our pitch-deck-writing.
Lest you think this is some kind of humblebrag, this hasn't turned into any investment yet. Just giving a scenario under which it could work.
It's in these enterprise folks' interest for us to have investment as it reduces their risk in adopting our product.
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There are plenty of startup pitch/demo events in the major markets. I imagine they've all gone virtual now, so no need to hop a flight to SF (or wherever) to get your few minutes on stage during open mike night.
1. don’t play coy. lots of people don’t actually say what they are doing.
2. guess the next questions and reply to them. “can i see your deck?” often comes next, so attach the deck. explain your current state of traction. funds raised so far. link to demo. screenshots.
3. if you cut and paste, make sure you aren’t changing fonts etc.
4. don’t use bulk emailer or anything that adds clicktracking. if you are mass emailing, i can tell.
5. don’t use whatever investor database that everyone else does. about 1/3rd of the stuff i guess lists “because of your investments in X, Y and Z...” where x,y,z are always the same three obscure companies that happened to be at the top of my crunchbase profile at one point.
I like the "don't chase, be chased" recommendation below. But when it comes to how to achieve that, the "get traction" recommendation could have been expanded on just a bit more. So let me try to offer a very similar but slightly modified recommendation: get into YC.
How is "get traction" different from "get into YC"? Instacart and Airbnb will give you a clue. Neither had material traction when they applied to YC, and what worked for them is that their business models and founders made up for that. Once you're in, you still have to execute, but you won't be writing any cold emails to investors anymore.
It's like getting a HBS MBA. Sure, once you have it, it's easy social proof.
YC gives up equity. If you don't have any prior experience, it's good, but not for experienced enterprise founders in b2b saas startups. The latter should make demo videos and blog about their progress once they've exited stealth. While in stealth, they need to approach alpha/beta users, who may well invest and/or m&a.
Both of these recommendations are completely useless to the average entrepreneur.
“Don’t chase, be chased” assumes you have the capital or team to execute. Many startups don’t have both and most successful startups require both. Investment alleviates the former to then help solve the latter.
“Get into YC” is hysterical advice because the % of companies who are accepted into YC is around ~2%. One does not simply “get into YC”.
If you think that my advice was hysterical, then look at the failure rates of all startups that get founded - it's hysterically high. So my apologies if I can't just give you a magic bullet.
Some context around the 2% - that's the average figure that encompasses a wide range of quality of applications. Everyone is applying to YC these days, to the point that a material number of those applications is an instant no. So if you 1) have a killer business plan, 2) have put in 10,000 hours into your craft as an entrepreneur, and 3) have a working demo with some customers and early metrics, you're likely dealing with just the top 30% or so of the applications. At this point, you're closer to a 7% admission rate, and your odds keep improving as you keep applying (because a lot of other people don't, and that's all tracked), so your net effective chance is closer to 10%. I don't know about you, but if someone told me "here's a path to the riches, and there's a 10% chance that it'll work for you," I would jump at it!
TL;DR Don't chase. Be chased.
1. Don't write cold emails to investors. You automatically give the investor the upper hand by chasing them. It's counter intuitive, but it comes off as desperate. VCs write checks into companies that they have a fear of missing out, or that other VCs are backing, not those that end up in their inbox (e.g. Sacca & Pinterest: https://twitter.com/sacca/status/620344394189647872?lang=en)
2. Take the time that you would have spent emailing investors and build product. Get traction.
3. Get investors to email you.