HOW TO COLD EMAIL AN INVESTOR
Writing an effective cold email takes skill. 99% of people have no clue how to format an email to get a response. If you can learn how to write a great cold email, you’ve put yourself far ahead of the competition.
For start-ups, emails are a powerful tool that can help get funding. Most people that start a business are not immediately well connected — It takes time and effort to build a network. Since you can’t just call up your friend who works at Greylock, you’re going to need a different approach. The problem is most venture funds only like to deal with people that they know, or have been referred to them. So you need to make them like you in just one email. Don’t stress, you can do it!
What I’m going to talk about can be applied to every type of cold email you will ever send. Whether you’re raising money, making a sale, or looking to get hired. Everyone is the same, and they look for the same general things. If you copy and paste though, please don’t forget to change the names…..(definitely not speaking from experience)
A lot of people don’t understand what the goal of a cold email is. The goal of a cold email is not to land a sale, or an investment. Your goal with the email is to:
1. Show them value
2. Start a conversation
The actual pitch comes later, in your second conversation. Your email should be no longer than 8–10 sentences, and should always close by asking for a follow-up conversation. Tell them quickly why you’re worth the time, and get a phone call.
You want to be direct, and short to the point. Lets break this down step by step.
1. THE SUBJECT. SHOW THEM VALUE IN ONE SENTENCE.
The subject of the email is incredibly important. You don’t want to ask for anything, or plead for them to open it. Keeping it simple works wonders.
There are two different types of subject lines I use. One for investors, and one for everyone else. I’m going to talk about investors first. The following is the subject line format that has given me the best response:
“Introducing [Company Name], [One line pitch]”
When I was working with WorkAmerica, I would use the following line for investors:
“Introducing WorkAmerica, the LinkedIn for Skilled Trades”
You want to give them an idea of what your company is about. If you don’t have a one line pitch, I suggest you think of one. It’s invaluable for networking. If you need more than 10 seconds to explain what your company does, that’s a bad thing. Show them what to expect when they open the email.
For everyone else, you’re going to want to get a bit more personal. If you’re trying to sell your actual product, the subject line should explain that your company will help them. For instance, since WorkAmerica helps companies recruit, my emails subject would look like this:
“Introducing WorkAmerica, we help you recruit the Skilled Trades more efficiently”
Address a problem that they have, and what you do to solve it. From this I had an open rate of 80%.
Summary: For investors, give them your one line pitch. For sales, tell them how you’ll solve their problems.
From here on out, I’ll be focusing on how to cold email investors. Sales pitches will be a different article.
2. THE OPENING. TELL THEM WHY YOU’RE REACHING OUT
DON’T INTRODUCE YOURSELF IN THE FIRST LINE. I cannot stress this enough. Everyone always takes the first line to say: “I’m blah blah, CEO of blah blah company.”
No one cares who you are (sorry). Now don’t get me wrong, once you get the conversation going, they are going to care very much about your personality and credentials. But not at first. If you went up to someone and spent the first minute of the conversation promoting yourself, people would get annoyed at you. People like to feel wanted. Listening is key in a conversation.
Same advice applies to an email. Your first sentence should tell them why you are reaching out to THEM specifically. Explain why you are cold-emailing them, and not someone else. This is key. Target your cold emails; don’t just email every investor you can get your hands on. Email the ones that understand your business (Shameless plug for VentureFocus, that’s exactly what we help you do).
Here’s a sample investor introduction:
“Apologies for the cold email, I usually get an introduction but my network in [their area] isn’t so strong. I found [the fund] while I was looking for top class Venture Capital looking to invest in the [industry you’re in]. Given our focus, I believe we could be a good match.”
Here’s what was actually written:
“Apologies for the cold email, I usually get an introduction but my network on the West Coast isn’t so strong. I found Sequoia* while I was looking for top class Venture Capital looking to invest in EdTech start-ups. Given our focus, I believe we could be a good match.”
*Didn’t actually email them.
3. SUMMARIZE YOUR COMPANY. TELL THEM WHAT YOU DO.
Here’s your time to shine. Take four sentences to talk about what your company does. Use buzzwords. I know. Stupid. But you want to show that you know the industry inside and out. Show them that you know what you’re talking about. Three things you should hit:
1. What is the problem?
2. How does my company solve the problem?
3. How do we make money/whats our value?
Here’s a sample:
“To summarize what we do briefly, we’re a B2B SaaS company that helps students in the skilled trades get linked up with employers through an online platform.
The main pain point we solve is helping companies recruit from the Skilled Trades. When looking for a white collar worker, LinkedIn is a great tool. But when Valvoline is trying to hire auto mechanics, they have nowhere to turn. We have a network of over 250 community colleges who are lined up to create profiles for their students to help them find jobs, while we sell access to recruiters and companies desperate to hire this talent.”
Ok great. We have that down. For most people that are just starting out, you’re not going to have huge traction. THATS OK. Keep focused on the first two parts. Identify the problem, and then talk about how the company solves that problem. Talk about the potential traction, or that fact that you have a couple of people signed up. Give them a reason to invest.
4. SOCIAL PROOF. TELL THEM WHY YOU’RE WORTH IT.
Here is where you introduce yourself, and your company’s credentials. Tell them about the fact that this isn’t your first rodeo. Or explain to them why you know your industry so well. If you went to a top university, throw that in there. Are you from Georgia, and your company helps feed squirrels in Atlanta? Tell them you know the area inside out. Has your company sold its product? Let them know.
When looking for angel or seed funding, the person is number one. Early investors like to see a competent team, not just a good idea. The mantra is that they invest in people, not ideas. Whatever idea you have will crash and burn unless there is great execution behind it. So you have to let the investor know that you’re not a bum.
Keep it short. Two sentence maximum. One sentence for each part.
Here’s a sample (not actually my credentials):
“I’m a Yale alum, and have worked at 3 different start-ups before founding WorkAmerica. Since launching our tech product two months ago, we’ve already had four paying customers sign up.
Present yourself in a good light, and you’ll be golden. The idea is to show that you and your company have some value added.
5. CALL TO ACTION.
“Are you available for a quick call in the next week or two? I’d love to be able to tell you more about us and learn more about [fund name]. I look forward to speaking in more detail!”
Simple, and straightforward. Get the call, and then you can pitch your product. During the call hopefully you can set up a real meeting.
6. ATTACH YOUR PITCH DECK
You should have a pitch deck if you’re contacting investors. How to create a good deck is a whole other article. Here’s where I’m going to put my other shameless plug. StartEz has put together a really great tool for building pitch decks. I suggest you check them out!
Either way, you should make one. It’s a great tool to have.
7. CLOSING THOUGHTS
It’s always better to get a referral. Most of the time, that’s going to be difficult. If you can get in contact without a cold email, that’s great. But cold emails have their place. If you don’t already have an existing network, it’s a great way to build one. Just remember the general rules.
1. Keep it brief
2. Start a conversation
3. Show them value
Even if you’re not reaching out to investors, these rules apply. Networking emails are the same. Ask for a phone call, not a job. Show them why they should hire you. Tell them why you’re a good fit for them, and they are a good fit for you. Make it seem like you’re not just self-interested even though we all know you are.
You don’t have to email the big boy investors right away. See if you can find funds around you that fit the bill, and reach out to them. Targeted emails work the best. The better you show that your company fits their criteria, the more likely they are going to get in contact with you.
Be persistent. If you don’t hear back in a week, follow up and ask if they’ve received your email. I once sent 3 emails to someone before I got in touch with them. Once I got in touch, we set up a phone call.
Last, have fun with it. Don’t be too worried if you don’t get an answer back. Getting a reply from 50% of people is a major success. Even 30% is good. Just remember to keep fine tuning, so you can figure out what works best for you.
Good luck with your emails!