July 5, 2022

Volume XII, Number 186

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July 05, 2022

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Investor Networking: Build Your Pipeline

Over 500,000 companies are started in the US every year, but even with those numbers, very few startups receive venture capital funding (“VC Funding”). VC Funding can largely depend on your investor networking skills and ability to forge connections with the people who may decide the fate of your company’s future. But breaking into the VC investor network isn't easy. The entrepreneurial communities are potentially game-changing in terms of introductions; however, putting yourself out there and attending networking events can be challenging.

Before diving in, have a solid understanding of the kinds of investors you would like to reach out to and research who is investing in companies in a similar stage of development. Look to make an impression with those people investing in your space and those who can make introductions, such as your lawyer or banker. It is essential to build a list of your top potential investors. It is also vital to build a list of people who can connect you.

Networking isn't just about meeting investors, it is also about growing and cultivating relationships. Nurture your relationships through a variety of interactions. Start with a pipeline of contacts, design a communication process, and then nurture each "lead" through that process.

Below are a few tips when networking with investors and ultimately securing capital.

  1. Network for the Long Haul and Cast a Wide Net

Network with investors and build a robust community of contacts with the long-term success of your company in mind. Putting in the work to develop relationships with investors at every stage will bear fruit in the long term if you can forge a meaningful relationship with them now. Many founders make the mistake of only networking with investors who are a direct fit for them at the moment because they do not want to waste time on opportunities that will not yield an immediate result. But it is important to keep in mind that eventually, your goals will be different, and you will need more investors. Therefore, keeping the long-term success of your company in mind, you should cultivate relationships with all types of investors. Those relationships can be helpful, like introducing you to someone in their network open to seed funding rounds. The goal of networking with investors is a long-term play. Don't be short-sighted.

  1. Start with Your Existing Network

LinkedIn and business sites are excellent places to get started and expand your network of contacts; in fact, already built networks are a good place to begin. Post something interesting that easily lends itself to announcing you're seeking funding and looking to develop investor relationships. Message colleagues who've gone through the funding process before, reach out to investors you may know, and invite them out for a coffee. Share knowledge and ask your contacts about their experiences with the funding process. These conversations may produce a recommendation or an introduction.

  1. Get More Social on Social Media

Social platforms like LinkedIn, Twitter, and others are great places to engage with investors. Founders looking to network with investors should post exciting news relevant to industry and startups and comment, retweet, and engage with other founders' content and directly with the investors you'd like to form relationships with. Start making a list of investors you'd select to connect with and link to them on social media and others engaging with their content, and check their profiles daily. Once an investor comments back to a comment on their posts, begin a more personalized conversation in a message.

  1. Have A Presence in Life

Social media networking allows for quick access since it is highly accessible, yet it moves fast and can be hard to cut through. Therefore, pairing virtual networking efforts with in-person networking is the most effective. Attend conferences and trade shows and speak when you can at events. These are great ways to meet a lot of new people at once. Introduce yourself to other industry experts and founders, and make sure to try and meet as many people as you can. Through this process, you may identify opportunities to get referrals or introductions.

  1. Tap into the Right Communities and Be Prepared

Another way to tap into the right groups is to take advantage of existing communities. For example, Investor networks and communities on sites like AngelList, CrunchBase, and FundersClub aim to connect investors and founders. Build a list of potential investors and do your homework to find out more about them. Once you have started engaging with an investor, make sure you have perfected your elevator pitch. When an investor queries into your company, you will want to quickly get to the point – a thirty (30) second pitch, briefly describing your company, the problem your company aims to fix, the solution to that problem, and how your company is unique.

All investors are people with unique interests and passions and a shared interest in investing and other preferences such as funding types and preferred industries and communication styles. Some investors want to know upfront the funding figure you're looking for. Others prefer not to mention dollar amounts at all. Spend the time to understand your audience. Look at their list of previous investments and perhaps connect with the founders of those companies and ask them a few questions, but always remember to be honest.

Networking is tricky in any social context, especially when developing investor relationships. The process is one of relationship-building. Once you get your foot in the door with an investor, you're off to the races.

© 2022 Foley & Lardner LLPNational Law Review, Volume XII, Number 102
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About this Author

Partner

Natasha Allen is a partner with Foley & Lardner LLP, based in the firm’s Silicon Valley and San Francisco offices, where she is a member of the Venture Capital, M&A and Transactions Practices. Natasha is a strategic advisor for her clients, supporting leadership teams in complex decision-making.

Prior to joining Foley, Natasha was a founding partner at a corporate and transactional law firm, where she counseled startups and emerging companies on debt and equity financing, venture capital financing, commercial matters and general...

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Saige G. Gallop Associate Foley & Lardner LLP
Associate

Saige Gallop is an associate and business lawyer with Foley & Lardner LLP. Saige is based in the firm’s San Diego office where she is a member of the firm’s Transactions and Corporate Practice, as well as the firm’s Technology Transactions & Outsourcing Practice. She is also the San Diego office liaison for Foley’s Racial Justice and Equity Pro Bono Practice Group (RJEPG).

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