How to find investors for your startup

[Music] most of the stuff i do as a startup founder is is pretty exciting i get to talk to customers and build cool new products and see how these products impact their lives but this part of being a startup founder really sucks it's arriving in the uk for only the second time in your life only to find yourself in quarantine for five days where you can't leave and you have to stay in the same airbnb lockdown for five full straight days so finding investors is tough it's emotionally draining it's time demanding mostly drink me because as a founder you're pitching your life's work in the end and you're going to be rejected most the time so speaking of this inevitability while in my quarantine let me tell you everything i know about finding investors q q the intro stuff [Music] so i guess you're wondering by the way the reason why i'm here in the uk is i'm sure anyway uh the process of finding investors is really is really a game of connections and there's this little diagram that i'm gonna draw over here showing kind of my step by step or like the hierarchy that you have to follow when when trying to look for investors because number one you want to go to people that you know and that's gonna be your step one and your step two a lot of founders i come across that just go and start pitching investors just external investors trying to find investors online friends family and fools is really an underrated category and one that i think many founders just overlook and i sort of get why i'll tell you my own case i'm costa rican even though my dad is a little bit of a small celebrity in costa rica i didn't grow up with money my family doesn't have any money and i don't have a lot of friends with money so where would you get someone to fund your startup in costa rica 500 000 is a ton of money as in many parts of the world but still but still i was able to raise some friends and family capitals from pre-seed money idea stage in costa rica so this to me is sort of like the proof that it's not impossible it's just hard and you have to sort of think outside the box a little bit and start building a network for yourself and when you go looking for investors when you go looking for stranger investors it is a bit of a red flag that you have not been able to raise any money from people that you know because you will they will expect you to have really depleted that option before going to them and i really can't count the number of companies that are just at the cold email stage and they haven't even visited this first friends and family part another fact here is that if you're building a software company in 2021 the truth is you really don't need a lot of money to get started uh you don't need to pay for servers you don't need to pay for your email system you can just buy intercom and use aws to build a very basic product you can even do it with no code tools now so in this day and age you and your team you should be able to build a very basic mvp with under say a hundred thousand dollars it's not that hard yes of course you would have to take below market salaries to do it yes of course a hundred thousand dollars is not enough to hire a development agency to do it for you but that's not the case you need to build it yourself same with marketing you're doing all this stuff yourself instead of hiring agencies so this friends and family round it's not five hundred thousand dollars it's maybe 100 or 200 and if it's of course made of smaller checks i'm talking 10 20 30 maybe even 50 000 checks but it's a bunch of people that join it and they they're investing in this company not because they believe in the idea definitely not because of your attraction because you don't have any they're investing in this company because they believe in you and that's why it's so important that you start with a network of people that know and trust you to build this [Music] so the the line over what a seed round is has got an overall blurry over the last few years uh normally a seed round is the first round of the first round of real money that you raise right may that be 500 000 or 2 million dollars my friend devrim from super pure their seat round was a two million dollar round which in a different world you would call a pre-seed round because they raised this before they had a product and this is of course an exception because deborah had a fantastic network that he could raise money from we didn't have the intention of raising even the second round came to us i didn't need to build a deck for it the point is that anytime you want to raise money and that number is above 500 000 you are probably gonna have to go to external investors for it it's no longer something that you can raise with friends and family for the most of us but you can definitely find a way to get them in your network and that that i think is still key how as a founder can you get connected to these investors early on for me two two things that we did were key to this first it was a time that i lived in new york and the time that i lived in the bay area why because i come from this i come from the outside i'm from costa rica so just being in those cities inevitably builds you a network of ceos of other founders and a little bit of investors just through that so that's one and then number two is accelerators starter accelerators are this fantastic bridge that companies can use to sort of bridge their way or have a soft landing when they arrive in a city and that applies if you grew up outside of these major startup hubs or if you're outside the us 75 of our youtube audience are founders that are outside of the us so if you intend to start a company there then an accelerator could be a very good option and you could debate a lot about you know the equity they take and whether it's worth it but if you need that as a bridge i think it's very much worth it it's it's it's paid off for us steve barger met in dream it when we did that and look where it's gotten us the accelerator time is this fantastic time in a company when you're gonna kind of be surrounded by other smart people by other smart founders you're gonna pull all-nighters together but also the investors and the partners on the accelerator you're gonna get to ask intros from them as much as you want like from a normal relationship you can ask them to do an intro maybe once or twice a month but when you're in an accelerator you can request intros from the partners five times a week that's what i used to do the the point here is that these relationships pay off they pay off in a very tangible very measurable roi you can get money meaning funding out of the relationships that you build through your starter career and even and there's no way to fast track this by the way even today that as a company sliding we're not really raising money we are profitable and we've been profitable for a little bit we're not raising money we might raise money in the future i will probably start new companies in the future so i want to build those relationships i don't want to waste time because when you are in a hurry when you're in an urgency to build these relationships it's already too late if you need to raise money in two months and you don't have the relationships to ask for money you're already too late so even today i dedicate some of my time to talking to these investors some of them reach out because they come across their content or a channel or whatever crm they use slide bean is popping up so i'll i'll take those calls i'll build those relationships but if you're not getting any of that yet uh we built a couple of tools that might be useful for you so first is our investor finder which automatically crawls the web to find investors that match your investment criteria and we have that available you can go to sliding.com investor finder to try it out but new and this we're launching with this video is a new tool to find accelerators so if you're earlier stage than investors which which many of our listeners and watchers are this accelerator tool is very very useful what it lets you do is you're going to be able to find accelerators in your space and in your area and you're going to be able to filter them by investment focus stage focus but more importantly when their deadlines are coming so you'll be able to find accelerators that are closing their application deadlines in the next coming weeks so you can get your stuff ready hopefully with a slapping pitch deck so it's day two which is a little bit of a highlight because we get to take our covet tests today [Music] so the last point i'll make on navigating your network section is your investors might introduce you to others other people that they know that might invest as well i'd say at least 20 of our round came from introductions from our for people who had already put money in the company but you can also ask them to do so they don't they can start it themselves but you can ask them to do so devry for example saw most of his run happen from just investors kind of just on their own kind of going and helping him raise the round uh in many ways uh but when you want to request an intro it's not that big of a deal step one what you want to do is find the investor that you want to connect with and find a reason a good excuse for you to connect with them you can do that through angel list you can do that through our investor finder so step two is you wanna go on linkedin and find out which of these people have a second level degree connection to you it's a very tiring and very boring task but you know just find out who you're connected with and find out of course who can make an intro step three find an angle it's not just hey i want to introduce this investor because they have money or because they invest in startups no like find maybe a company they invested that it's similar maybe a industry that they're interested in but don't just send a request for an intro just randomly make sure that there's an angle to it and then four send an email to your contact requesting the intro bonus points if you add a blurb at the end of the email so they can just forward that email to the investor instead of having to write one of their own again have some touch in these emails people are busy and they generally don't have time to like you're asking them for a favor right so just have some touch of it don't abuse your power to request uh introductions some don'ts and i get a little bit of this already uh first don't say hey do you know any investors in our space that you can introduce like we don't have a database in our heads of people that we can introduce to you uh just find someone specific ask for that intro again don't abuse this power uh one two into requests per month i think is reasonable i used to do five a week to the dream at partners but that was when we were part of the accelerator aside from that time you just can't abuse it so much and very important do not send a deck in advance this is a rookie mistake you first ask for permission to send a deck you could first ask if they'd be interested in seeing your deck and then if they say yes you send your pitch deck every single one of the investors that invested in slight bean came through one of these three methods in general connections and network any method below this one that i'm going to talk about in the next few days i've gotten into some advanced conversations through those but i've not been able to raise money from either and as you've probably seen this kind of becomes a tedious task right it's a time demanding task and this is why i say that founders and the ceo especially needs to carve out time to raise money it's not a it's not a side task that you do it you actually need to carve out three or four months of your time which endangers the company right you need to decide when in your company's timeline is the best time to raise money because your company is going to be running without a ceo for for a little bit to aid a little bit of how tedious this task might be we have created the investor finder which essentially takes care of the crawling part of this process then again if you've tried this if you've been at it for weeks and months hopefully before you give up then you can move to the next step which is conferences and events we'll talk about that tomorrow [Music] so i guess the first disclaimer with conferences and events is that none of my investors came from conferences or any of the options below this one all of my investors i met with the options above it's not impossible i've seen i've seen it happen i've seen companies raise money uh pete from jackpocket made his first investor at south by southwest but it wasn't kind of the conventional meet and greet table and i've been to a fair share of conferences i made a video about it i'm going to saster in september in san francisco if anybody's going to be in town but my general feeling with conferences is that i'm a bit of an introvert in these settings like i'm not the one that goes chasing people to start conversations i've seen people who are and they definitely get much more value out of them than me and in my experience and what i've heard like the chance to meet investors in conferences generally revolves around you just talking to random people and just getting to meet them it doesn't happen in these kind of investor meet-and-greet tables or they they're not stopping by your booth and kind of funding your company because of that that's not usually the way that happens i feel that these relationships mostly happen randomly at the conference or on the after parties and happy hours what you definitely don't want to do and i've seen i've seen it done is people kind of go through the list of attendees to the conference and they look for an investor usually like a famous ish celebrity investor that they want to pitch and they chase them around all the conference or they're waiting for him to get off stage i've seen that happen it looks kind of pathetic and i don't think it can lead to to any success as far as i've seen so today is hopefully the last day in this airbnb we actually got out to see the world to get our test release test if that comes negative we should be able to get out uh let's talk about these angel groups some angel groups and some smaller venture funds especially for the early stage will let you apply they'll have an applied form on their website and they generally work i have i didn't end up raising money from any of them but i did get replies and i did get some activity and meetings with these funds that again accept pitch sticks they're not the sequoias they're not the famous and reason horowitz funds they already have a huge pipeline of deals and you need an intro to get to them i'm going to make it a task to ensure that our accelerator list the one i mentioned before also includes a list of the funds that allow these applications after being locked in for five days we are finally free right so the advantage with the twitter for startups world is that it's a small close-knit community this approach could apply to twitter or some communities like clubhouse and a lot of investors are constantly generating content they're doing threads and and doing replies and many even have dms open so you can pitch them directly through twitter and that is your way in really it's about commenting it's about reacting to what they're saying it's about getting in on these threads and it took me years to force a habit on twitter i wasn't a big fan of twitter at first but i truly forced the habit on myself by just deciding to spend some time on twitter every single day now that i've learned to appreciate it i do i do see the value in the network that it can provide something that's very different that you don't see across other social networks it's where i'm most active by the way so if you ever want to ask me something twitter is probably where you're going to get a reply first again what you don't want to do is just cold pitch people you want to warm up that lead first again create a small little twitter relationship with them for a few weeks or maybe months before you actually pitch that investor and a lot of founders get that wrong just going cold pitch just like it's a cold email so don't get me wrong meeting investors through twitter could mean weeks or months of work but it is better than nothing small commercial before i go to cold emails our weekly newsletter has a section called the twitter thread of the week which is a good way to kind of get a head start on what everybody's talking about in the startup world but finally let's go to cold emails and again this is an absolute last resort if you should have been working for weeks or months in in the other options before you go to cold emails but if you absolutely have to here are some tips to get a head start so first you want to do warm intros warm emails to them so you want to research what what they're doing research the companies they're investing and write something that sort of relates that that shows that you've done some homework and that there is a valid reason to contact them make it as personal as possible and never ever send email blasts and always ask for permission to send your deck first so don't just send your deck out to people another common mistake i see is founders reaching out to investors who have invested in their competitors they're not going to invest in a company that directly competes against one of their portfolio companies and worse for you they might share information from your deck with the founder of your competitor company it happens to me i've gotten some insider details from pitch decks that that uh that founders have shared with my investors on companies that compete with us another option when called emailing an investor is to use an older company as leverage either by mentioning that you're a fan of that company and even reaching out to the founder of that company like we founders we're busy people but we try to be as nice as possible and help as much as possible to the to our fellow founders because we we know the struggle so if you have if you have a good relationship with another founder if you start to establish that just by reaching out to that founder asking them about an investor there's a chance that you can have a warm intro to that investor eventually you can also use one of their previous investments as leverage just show that you do homework show talk about that company while you understand it or where you like it and just make that email more personal also acknowledge that you're sending a cold outreach it's not nice to receive a cold email most of the times they won't reply so just acknowledge the fact that this is an awkward situation apologize first and just tell them that you had no other route to contact them i think that that goes a long way and like i said while this option looks easier it is less successful than any of the other six that we talked about today so go and try those first before you call email investors hope this was useful make sure you hit that subscribe and we'll see you next week [Music] you

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Keywords: slidebean, caya slidebean, company forensics, caya, startups, startup investors, venture capital, venture capital financing, how to start a business, fundraising, entrepreneur advice, investor pitch deck, startup entrepreneurs, startup company, how to find investors, how to find investors for your business, how to find investors for startup, find investors for startup, find investors for my business, find investors for your startup, how to start a business with no money

Id: WeoWGA_VzNU

Length: 18min 11sec (1091 seconds)

Published: Thu Sep 09 2021