PS#011: VC Outreach Best Practices
Alright, 2023 has kicked off. Let’s get down to business.
After hearing a lot of your feedback, I’m going to focus more on the tactical aspects of breaking into venture.
Today, we’ll discuss how to share deals with venture capitalists.
This can be one of the best tools for breaking into venture. Sharing deals can communicate a lot about how you might perform as an investor. It won’t show everything, but it can often be enough to get the attention of a specific investor or firm.
We’ll cover the following…
Introductions
Outreach approach
Preparing for next steps
Let’s dive in.
Venture Capital is a collaborative industry.
Unlike other industries, venture capital is often very collaborative.
Many firms will partner to finance companies, make introductions for other funds, and generally trade intel on the market.
That’s all to say, sharing deals is common within the industry and a core part of the job.
Actually, in terms of sourcing, deals from other investors are often some of the highest quality.
BUT, the manner in which you share deals and interact with other investors is important. It can determine whether or not other investors want to work with you in the future.
Introduce yourself: warm vs. cold introductions.
First things first, you need to introduce yourself. Whether you’re trying to break into venture or just getting started, it’s unlikely other investors know who you are yet.
Generally, there are two ways to change this: (1) warm introductions or (2) cold outreach.
The preferred path is with a warm introduction.
If you can get connected this way, it’s the best route. It provides a trusted foundation for the relationship from the start. You should still provide some context on yourself, your firm, and the reason for connecting (we’ll cover this more in the next section), but sharing deals should be much easier with a warm introduction.
However, when you’re just starting out, you’ll often need to leverage the second option – cold outreach.
Since they have no context for the relationship, you’ll want to provide it. Whether you’re reaching out via email, LinkedIn, Twitter, etc., you’ll follow the same approach.
Let’s talk about setting the stage for this relationship in more detail.
Outreach approach: know your audience.
When starting a relationship with cold reach, I try to be clear, concise, and specific to the individual. I tailor my outreach to the individual.
In my initial message, I want to communicate the following…
Who I am
Why it matters
How I can help
If you can hit on these points, you’ll increase your chances of making the connection.
1) Who I am
I try to use 1-2 sentences to define who I am and what I do.
I want them to be able to quickly register how I fit into their world.
A few examples…
My name is [NAME] and I am an investor with [FIRM NAME]. We focus on [FUND MANDATE] and have made investments, such as [X, Y, Z].
My name is [NAME] and I am [ROLE] at [INSTITUTION]. I’m working on building a thesis on [X SPACE] and have been building relationships with companies such as [X, Y, Z].
Put your own spin on it, but make sure you’re clear and concise. Most investors don’t have the time or attention to read through long emails with your life story. Stick to the point.
BONUS: If I’m sending an email or connecting on Twitter, I’ll time this outreach with a connection request on LinkedIn. It’s like sending a resume with your outreach to confirm that you’re a real person and not just spam.
2) Why it matters
Now that they can contextualize who I am, I want to share why my outreach matters.
To frame a bit differently, in the entirety of their overflowing inbox, why should they stop and read mine? What value can I deliver right now?
In the early part of your journey, this is going to be about providing deal flow and information.
If you really want to make an impact, provide the following…
An investment thesis in a space they care about (research the firm to confirm)
A list of potential companies with your relationship to them
An example company in the email (usually the best one where you have a relationship)
From a messaging perspective, it might look something like this…
Just to kick this off, I saw [X DEAL] that I think may be a good fit for you. Details below…
[Company Name (website)]
[Short description]
[Performance to-date]
[Why this is an exciting opportunity]
[Relationship context]
Start off these relationships by providing as much value as possible. Give first.
3) How I can help
OK, so we’ve introduced ourselves and demonstrated our value.
Now it’s time to define the relationship going forward. This is where you make the offer/ask.
Typically, if you’ve provided something of value to the investor, they’ll be interested in connecting. The correspondence may start over email and move to a call, Zoom, or in-person conversation.
Here’s an example of how to phrase the “ask” of an investor’s time…
In the presentation attached, I’ve included some more companies that I think fit your firm’s mandate. However, It’d be great to learn more about your investment criteria to make sure I’m providing relevant and quality deal flow.
Do you have some time in the coming weeks to connect?
Hold on. Stop.
Did you see what we did there?
We’ve made this “ask” in a way that is about providing more value to them. If we have a better understanding of their investment criteria, we can source better investment opportunities.
Again, it’s not about us, it’s about them. Give first.
Of course, for us (aka, the aspiring investor), we are getting something in return – an opportunity to show off our skill set and build a relationship with this investor.
Side note: If you want to learn more about the entire venture skill set, check out my course – How to be a VC Associate.
All together
Alright, when we put it all together, it may look something like this…
Hello [Investor],
My name is [NAME] and I am an investor with [FIRM NAME]. We focus on [FUND MANDATE] and have made investments, such as [X, Y, Z].
I’ve been spending time building a thesis in [X SPACE] and noticed that you’re active in the space.
We’re looking for [X TYPE OF DEAL], which I think fits your firm’s mandate as well. However, It’d be great to learn more about your investment criteria to make sure I’m providing relevant and quality deal flow.
Do you have some time in the coming weeks to connect?
Just to kick this off, I saw [X DEAL] that I think may be a good fit for you. Details below…
[Company Name (website)]
[Short description]
[Performance to-date]
[Why this is an exciting opportunity]
[Relationship context]
I’ve included some more companies that may be a fit for your firm in the presentation attached.
Looking forward to connecting.
Best,
Remember, be clear, concise, and specific to the individual.
When you’re sharing company-specific information, make sure you’ve got the OK from the company to share this data with investors.
Also, find your voice. This might not fit your style. Figure out what works for you.
Prepare for next steps.
OK, we’ve introduced ourselves, demonstrated our value, and defined how we can help going forward.
Now, what happens if it works?
Well, we need to be prepared for next steps.
If we’ve asked for a call, we should be prepared to walk through the companies we’ve presented.
If we’ve offered a view or investment thesis, we should be prepared to discuss it.
If we want to talk about their investment criteria, we should be prepared to ask the right questions (Note: I’ll cover this in a future issue of Preferred Shares).
If we’ve offered to make an introduction, we should make sure we are prepared to make that connection to the entrepreneur.
When the opportunity presents itself, make sure you're prepared.
