Raising funding for a business is challenging. At Visible, we like to look at the fundraising process similarly to a traditional B2B sales and marketing process — like a funnel.
- At the top of the funnel, you are finding potential investors via cold outreach and warm introductions.
- In the middle of the funnel, you are nurturing potential investors with meetings, pitch decks, updates, and other communications.
- At the bottom of the funnel, you are working through due diligence and hopefully closing new investors.
Related Resource: A Step-By-Step Guide for Building Your Investor Pipeline
Building relationships with leads is crucial to success for both a sales and fundraising funnel. Investors are typically investing hundreds of thousands or millions of dollars so building a relationship with investors will help them build conviction.
Having a game plan for networking with potential investors can set you up for fundraising success. Check out our tips for networking with potential investors below.
The Importance of Networking for Investors
According to Brett Brohl of Bread and Butter Ventures, the average early-stage fundraise should take around five months. This means that investors are trying to deploy hundreds of thousands or millions of dollars within just a few months of meeting founders.
In order to better your odds of fundraising success, this means that you need to start networking and building relationships with investors in advance of a fundraise. This will help investors build conviction and move quickly when it does come time to raising capital.
Related Resource: 7 of the Best Online Communities for Investors
Key Benefits of Effective Networking
Founders have to take on countless roles and responsibilities when starting their business. For many founders, fundraising can turn into a full-time job — on top of their other daily responsibilities.
By investing in networking throughout the year, you will be able to build momentum when it is time to “actively fundraise.” You will have already formed relationships with investors and will allow them to build conviction quickly so you can get back to your day-to-day.
Check out a few key benefits of networking with potential investors below:
- Momentum when it comes time to fundraise. By networking with potential investors you’ll be able to speed up your fundraise as you’ve already built relationships.
- Introductions to other investors. Most investors will pass on a potential investment. However, they can make introductions to other investors that might be a fit for your business.
- Building out your network. The startup world is a tight-knit circle. Forming relationships with investors will allow you to grow your network and find introductions to peers, potential customers, hires, etc.
Related Resource: 6 Helpful Networking Tips for Connecting With Investors
Breaking Down the 9 Effective Networking Tips
Networking might be easier said than done for many founders. Finding an introduction or way to network with potential investors can be challenging. Check out our tips for how you can effectively network with potential investors below:
1. Attend relevant investment seminars
Investors are typically involved with different events in the venture capital space. Many are geared towards helping founders network with investors. If you are located in/near a larger city, chances are you will be able to find local events that are full of local investors and VCs.
2. Cultivate a strong online presence
Venture investors typically have a strong online presence. One of the best ways to network with potential investors is by having an online presence yourself. You can start by following ideal investors and slowly start to engage with them.
3. Prioritize genuine relationships over quantity
There are thousands upon thousands of investors. However, not every investor will be a good fit for your business. We recommend identifying your needs and building a list of “ideal investors” for your business. By focusing on building relationships with these investors, you’ll be able to make sure you are spending time on investors that will be beneficial to your business.
4. Stay updated with industry trends
Investors seek to stay in the know when it comes to different industries and verticals. By staying up to date with your industry or focus area, you will improve your odds of being able to offer investors something of value and start building your relationships.
5. Master the elevator pitch
If attending different networking events or seminars it is important that you have a plan for how to engage with investors. An aspect of this is likely having your elevator pitch dialed. A shaky or uncertain elevator pitch will be seen as a red flag to many potential investors.
6. Join investor groups and associations
As we previously mentioned, the startup and VC world is a tight-knit community. There are countless investor groups and associations — some based in a specific region or city and others based on a vertical or market.
Investor groups are a great opportunity to network with investors and peers who are a good fit for your business. Most will host different events and workshops that will allow you to further deepen relationships.
7. Leverage technology for networking
In recent years there has been a rise in different technologies to help founders and investors connect. These tools typically include investor profiles that surface their firm’s vital information (some support profiles for startups as well).
Related Resource: How Startups Can Use an Investor Matching Tool to Secure Funding
Visible Connect, our free investor database, enables startup founders to filter and find the right investors for their business. We use the data and information that is crucial to finding the right investor — like check sizes, investment focus, investment geography, etc.
From here, you can add investors directly to your Visible Pipeline to keep tabs on your fundraising conversations and actions. Give it a free try and find the right investors for your business using Visible Connect.
8. Consistent follow-ups
Fundraising can be a long and arduous process. Investors are incentivized to move slowly and wait as more data and information about your company and market becomes available. It is critical to stay persistent and continuously follow up with potential investors.
At Visible, we recommend adding potential investors to your monthly investor updates to keep them in the loop with your progress. Check out a template to nurture potential investors here.
Related Resource: How To Write the Perfect Investor Update (Tips and Templates)
9. Mentorship and being mentored
One of the best ways to network with potential investors is to seek out advice and mentorship from them. Going in with a true intent to learn from their experiences is a great way to hone your skillset and build a strong relationship — with them and their network.
Related Resource: Startup Mentoring: The Benefits of a Mentor and How to Find One
Find Out How Visible Can Help You Connect With the Right Investors
As we mentioned at the beginning of this post, a venture fundraise often mirrors a traditional B2B sales and marketing funnel.
Just as a sales and marketing team has dedicated tools, shouldn’t a founder that is managing their investors and fundraising efforts? Use Visible to manage every part of your fundraising funnel with investor updates, fundraising pipelines, pitch deck sharing, and data rooms.
Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days.
