The best intros come from portfolio companies and other investors from a different stage, but with similar or better status to the target.
14 May, 2017ALEXANDERJARVIS.COM
So, you want to raise money for your startup and you require investors. Only like most people, you don’t know any, right? So how do you get introductions to venture capital investors to make your plans reality? It’s hard right!
Well let’s dig into this in detail. By the terminus of this blog it you will know what you should do, where you shouldn’t spend your time and how to max your outcome. More importantly you won’t look akin a n00b and make social etiquette errors that can damage oneself. Let’s commence.
Investors don’t want to meet you. They wanted to be introduced to you. The best intros come from portfolio companies and other investors from a different stage, but with similar or better status to the target.
You likely won’t know the nature of the relationship people have together, but if you do, that matters more than the intermediaries job title.
Under no circumstances cold email investors.
Affirmative. Please just get introductions. It’s a great waste of your own time to argue with me on this. I’m also not listening; you’re talking to yourself right now which is a little weird.
It can transpire but the point is that your time RoI is so low I don’t recommend this as a hack. One VC surveyed his friends and reckons the probability of getting a meeting from a cold email is 1/600. That’s a meeting, not invested.
Since you are desperate for disconfirming evidence, I will give you one from an investor. Charlie O’Donnell at Brooklyn Bridge Ventures manages a small fund in NYC. He writes that he does not actually mind cold intros. Before you take that as all the evidence you need, note he expects to be able to check up on you through shared network.
“A lot of VCs ask to be introduced through someone. If the connection is a strong, trusted one, that helps, but to be honest, there are probably less than 50 people than I would just blindly take a meeting based on an intro alone.
Reality is that we’re probably connected in some way anyway through various social networks anyway and I’m very quick to figure out all of those connections to ask about you.
So, if your connection can’t really speak that much to what you’re doing, or you want to save them time, feel free to just point me to LinkedIn and tell me who we know in common that you think would provide a good reference.
I don’t mind cold intros at all–but it’s hard when I can’t figure out who you are in the context of my network. Just make sure you’re easily findable on the web and various social networks so I can pinpoint your location in the graph within a few seconds.”
What Charlie is saying in effect, is getting an intro can be ineffectual and time consuming. So rather than pinging all your shared connections, just ping him and tell him all your shared connections. He’ll figure out if you are insane or not. This assumes you have shared connections and they will vouch for you. Do you have shared connections already?
Simply put, you are unlikely going to be the exception so wise up. Is cold emailing an effective use of your time? You are meant to be building a company, and if you get traction the VCs will come hunting for you!
In case you are thinking that the ‘send us your business plan’ button on a VC’s website is a secret loophole, it’s not. That’s even worse than making the effort to find someone’s email. This is like putting a message in a bottle and sending it out to sea. Yes, there is some lowly analyst that has to read all the crazy email, but it’s going to be low on the priority list.
To put this statistically, an anonymous VC on HackerNews said about stopen submissions:
“Our hit rate from open submissions was 0.25%, that is, it took 400 submissions to get one company in which we would invest. And that company is one that likely would have come to us through a more-closed submissions process.”
Fine. Ted Serbinski at Tech Stars posted a blog and shared an example of a cold email he invested though. Here you go:
I hope you are having a fantastic day! My name is Nate, and I’m a co-founder at XS. I am reaching out because you backed Miso Media, which I love, and I wanted to get your advice about our new company since we have just opened our seed round. To thank you for your time, if you’re interested in surfing and you find yourself back in the San Francisco Bay Area, I’d love to give you a lesson, or more traditionally, buy you a cup of coffee.
I know your time is really valuable so in the spirit of the 30 second pitch here is an overview of XS.
XS is creating a mobile community for action sports enthusiasts. Our app is a place where people can view and share high quality user generated & professional photos/videos. As we grow, we’ll leverage user behavior and information to sell discounted sporting goods. Think Instagram/Pinterest meets Fab for sports.
1: Pitch deck: http://www
2: 3 min pitch video: http://www.youtube.com/watch?v=3MgExhuSJsw
Thanks for your time and I look forward to meeting you in the near future! Best,
Nate Mihalovich Co-founder,
There you go, now moving on.
VC’s take pride in their dealflow, but their access to the best deals is what keeps them in business. They will tell LPs, during their 2/3 year fundraise cycles, stats such as how many deals they get top of the funnel, which your email will form part of. But that funnel goes from 2,000 to 5 funded per year.
So, do they want to meet you? No, not really actually. Investors don’t want to meet you. They wanted to be introduced to you. They want to open up their inbox or receive a call and read/hear “Jim, I’ve found your fund maker. All you need to do is say yes!”
Reading 2,000 business plans is a total buzz kill. They are not fun to read. So great investors get others to do the vetting for them, and those people do it willingly. Their network of introducers do the first round of vetting and this includes earlier stage investors. VCs say “you aren’t a real entrepreneur if you can’t get an intro,” but let’s be honest, that’s sort of pushing people through vetting gates and adding a justification for being lazy/ not having the time, post hoc, once they realised intros work.
VCs want a great deal not dealflow.
I personally don’t know any investor that has invested in a startup that came through unsolicited.Neither have a I read that this has happened at the big US firms with any regularity.
On this topic, I’m not even sure what deals got funded at conferences by people going to stands. I wouldn’t be surprised if it happens, but buying a $2,000 stand at Disrupt or Web Summit is a total waste of cash so you know. Winning the award is a totally different story though.
VCs fund people that come through introductions (and people they have known for a long time), so get them!
Please internalize this: if you do not, nor have already an established a relationship over the long term with an investor, they don’t trust you as they don’t know you from Adam! Some email comes over the transom and you think Mrs investor should pull out a check book and issue you $1m? Hm, when I put it that way it makes sense right?
So yes, you can make contact with an investor, they may respond, they may even show interest, but it does not mean that they trust you. Why should they?
Think about you hiring an engineer for your startup. Your buddy Benedetta says meet John, he is amazing, he hates Rocket and wants to leave. Then you have Subho, he applied on LinkedIn and you have no shared connections. In the same way you trust Benedetta and Subho is an unknown quantity, VC at Blue Shirt Capital is thinking about your pitch (i.e. you) in a very different light depending on how he was put in touch with you.
Investing in a company is a very personal thing and not taken lightly. Like everything in life, people like to make money, but they hate to lose money. They especially do not like looking stupid and wasting time. Deals that come through introductions also help VCs deal with any buyers remorse, and provide an excuse to the LPs if all goes to hell.
There is also the matter of focus and prioritisation. Digitally, there are a couple of piles of pitch decks on a computer. They are hot leads, maybe interesting and everything else. You don’t want to be in the later. You might never get a look in.
“VCs are generally bombarded by requests for meetings, so a warm introduction helps an entrepreneur’s request float to the top of the list.”
Chris Wand, Managing Director, Foundry Group
I know your chomping at the bit to get your intro (one of the 1,000 on your hit list), but sorry mate, not all introductions are created equal. If you wanted to join the Mob would you want the recommendation to come from the pizza guy or the Consiglieri?
The category of the person whom makes the intro is not so as important as the nature of the relationship of the person with the VC. It may turn out that pizza boy isn’t tight with the mob, but grew up near Sand Hill and his godfather is Ron Conway. He may not be an investor, but he has a close relationship with the targeted investor.
So the best intro is in fact people with personal relationships. You won’t know that it first instance, but if you ask someone how placed they are to make an intro, you can discover if that intro carries weight or not.
No. If you want an intro to a new startup founder, no one has a bother doing that right. The founder has no cred. If you want to get to a z-list angel who likes deep learning and you do deep learning, who cares?
The quality of the relationship someone has with an investor matters exponentially the higher the social status of the investors. In the Valley in particular, many VCs are gods among men. I mean some are billionaires, or near there.
I was in SF for the first time for the Premoney conference (investor conference) and it was so funny to see the pecking order amongst all the investors. It’s a bit like an American high school canteen seating. So yeah, if there is a pecking order amongst investors, there sure will be in terms of who you can ask to make a quality, qualified introduction to high-status investors. The introducer needs to have close enough status for the intro to be of value.
This leads us how status works.
In high school you learn about status. In math class, if you didn’t have any, you learned about the transitive property.
The transitive quality work thusly: if you want to get on the football team, the fact your best friend is the hot cheerleader helps. Candy is your friend. Jim the Captain and QB likes Candy (sometimes visually). Candy introduces you to Jim. Jim helps for purely altruistic reasons. Boom.
David Hornik posted a blog a few years back and describes this more maturely in VC terms:
So how do you get funded? Step one — get an introduction. Find someone you know who can introduce you to the person you want to pitch. The closer your relationship with the person making the introduction, the better. And the closer that person’s relationship with the VC the better. I’ve written about this before and described it as “borrowed credibility.” If you are being introduced by someone who has credibility with the VC, and you have credibility with the person making the introduction, you will have credibility with the VC.
I learned about this in elementary school math class — it is called the transitive property:
A has credibility with B
B has credibility with C
A has credibility with C
And as a corollary to the traditional transitive property, (1) the stronger the credibility between A and B, and (2) the stronger the credibility between B and C, (3) the stronger the credibility between A and C.
So as I was saying, if you want to start hitting Accel, a16z, Sequoia, Benchmark etc partners, your buddy at Chucky Cheese ain’t going to fly. You need to pull out the big guns (Candy). Assuming you do have a network, when you look at the 16 shared connections you have to the Partner, think critically about who to hit up.
For sure I hit up friends for intros to people too. I have about 6.5k connections on LinkedIn but there are always people who are more tricky to access. Despite putting in years of networking and earning social capital, I need to keep earning cred just like a neophyte founder.
My learnings on who are worth hitting up are as follows. Note this assumes you are using Linkedin:
Do not accept any offer to make an introduction!
Any requested introduction that starts with “I don’t know if you remember me” is almost more negative than a cold email. Always ask if the person knows your target well enough to make a qualified introduction first.
Any requested introduction that starts with “I don’t know if you remember me” is almost more negative than a cold email. Always ask if the person knows your target well enough to make a qualified introduction first.
How well placed are you to make an introduction to John? Do you know him well?
Often by simply asking that question you will find they will say they are not the best person to make the introduction. That sure has happened to me a lot. Yes, I always ask, and when people say they might not be the best person I take heed. It’s better to get a warm useful intro than nothing at all.
As discussed, not all introductions are made equal. There is a pecking order, so be aware of whom are the best people to get intros from. We will go through each one of these sequentially.
Understand basic human motivations are complex and there is often more than meets the eye. Someone making an intro will play into two boxes:
I am going to go through each of these categories of who to target, but remember you never actually know who has real relationships with people that defies category.
These are ‘Golden Tickets’ if you read Willy Wonka. Intros from these guys pretty much guarantee a meeting. This category is a little unrealistic, since you won’t be reading this if you have this pull.
VCs have bosses, they are their investors. They are called LPs. I have had LPs make intros to VCs before and guess what, I had meetings. You don’t know these guys in all likelihood, but if you do, hit them up.
All VCs will very proactively go after introductions that have come from a founder who made their investors’ money. VCs are fund managers. They are stock pickers. Founders who have made money for both themselves and their investors are deemed to have an idea of what the next good stock will be. But more than this, they want to reinvest in these founders. If they don’t treat them well (such as taking intros) they might not be able to give them more money.
If you don’t have strong network with these guys, the issue is they are proportionally famous to the amount they exited for and so they probably won’t talk to you, or at least without a lot of effort. It’s not likely you are going to just add them on LinkedIn and get a coffee.
Next better than founders VCs made money from are those they hope to make money from. Getting into the best deals is really hard. Since you are just trying to get an intro you probably find this funny, but yes, VCs have to sell really well to get into the best deals.
If founders are up and coming hot, they are probably pretty busy. You may not be able to access them, but if you can, savvy. The VC will take any meeting if it can help them to get into the deal. I say this too lightly- the VC will not necessarily meet with you, but they will at least respond to emails more politely than usual.
Anyone who is famous, has pull, is kind of a big deal, investors surely will at least scan the email. CEOs of big companies should know what is required to make a company work, so if they think Pied Piper is cool, VCs will surely have a look.
This is possibly they best place for you to go fishing. VCs have 5-30 companies and legacy ones too, so that means in aggregate there are a lot of touch points to a partner at a VC for you to hit up.
This is really a great pool to tap for intros to their investors. Founders talk fairly regularly and VCs know good founders are great sources of dealflow generally. Furthermore, larger companies will have larger boards and likelihood of senior execs having board visibility. You may be able to hit up the VP or marketing or sales (who will get far less requests) for an intro rather than just the CEO/founder. VCs will check out these second rung intros out but may be prudent depending on the performance of the company and their opinion of the exec making the intro.
But to focus on founders, there are two categories here on the status axis:
In my experience, don’t bother pinging founders who are too high status compared to you presently. The analogy of pick up rings true. You can only go up 2 points. If you are a 3, an 8 is beyond your reach.
Generally founders +2 points are responsive unless you have strong commonalities. Be aware that usually only one founder has the relationships with investors, that’s usually the CEO since they deal with fundraising whilst others keep the startup on the tracks chugging along. Find and get the intros from that person at a portfolio company.
There is always a pecking order. Lower level VCs need to earn cred. They want to look good to ‘cooler’ VCs than them and will suck up a bit. The issue is why would a cooler VC make an intro to a lower level VC?
The main reasons are:
Understand if the motivation for this intro is not clear, it may end up working against you. It raises too many questions, as if this company is so good why are they giving it up to someone else? Be judicious in this source of introduction.
This is very similar to the above point. They may well be friends but again. Why is investor making the introduction?
Startups fail right? Depending on the stage and the sector investors will inevitably invest together. So long as everyone played well together there is no reason why an investor will not do so again with another. However, if they had a bad experience they may well not. They may even question the other investors ability to evaluate a good quality deal.
This is painful, I saw comments on a blog entitled ‘how to get introductions to investors’ and a founder asked ‘can I just send a cold email instead?’ No seriously, don’t do it.
On LinkedIn they may promote their InMail and say that you get better conversion, but whilst this is true in some instances, look at the LinkedIn profile of investors, many will say that they do not read their LinkedIn or even InMail. Just because you have to pay to be able to send InMail does not make it any different to cold emails.
This is the random one on the list as it assumes you are already funded. These introductions can work both way, but are not the best source as it comes with a lot of baggage.
Fundamentally it is your investor’s job to help you get funded and all other investors know this. However, there is an information asymmetry since your investor knows more than anyone else will, other than you. The receiving VC assumes this. So why is the investor making the introduction; no one will assume it is for the benefit of a new investor unless this has been proven before.
Let’s work through the scenarios:
There are other categories of people who may make introductions for you. These include brand name founders, service providers such as lawyers accountants bankers and even headhunters, as well as the murky world or everyone who want to break into the investment field. While these may well be potentially great sources of introductions for you they can also be dangerous. The value of an introduction is not the same. If you’re looking for one great introduction these may will not be it.
The reason this may potentially be dangerous to you is that you do not know what a good introduction is and what a bad one is. The better sources from a better network will say upfront that their relationship is not very high-quality (and look elsewhere), but the poor source of introductions don’t know that they are a bad introduction themselves. They think by sending deal flow they can somehow curry influence, when this is actually not the case. Understand that venture capital and start up is very sexy to a lot of people. Most people overstate the quality of their relationship with investors.
In particular, there are also lots of deal brokers who charge for making these introductions. They all tend to and are incentivised to overstate the nature of their relationship. They will say they are best friends, but in reality they only met at a conference once and that is it. In these cases, as we discussed before with borrowed credibility, if your broker has a poor relationship with the investor that will also be transposed onto you in the same way that a good relationship would be.
Investors know investors. It’s not hard for them to become friends (at least professionally); there is a lot of common ground and startup founders to bitch about 😉
Investors are a great source if they are either upstream or downstream to the stage you are at, or are a thematic VC and don’t invest in your sector. VCs making intros at your stage are a risk since the obvious question is why aren’t they investing themselves? If they are not a lead investor (which is most) and make an intro and say they will consider coinvest then you are gold. However if if VCs are known to 1/ be lead investors and 2/ invest in your stage, why the hell are they sharing the deal?
What you want in this case is for the VC to state they are interested in the deal and why they can’t lead. The ticket being too large is one good reason. I checked my email archives and found a real example of a VC thread (only blanked the name) when I asked for an intro.
Alex, I’ll connect you with [VC name].
We couldn’t lead the round but could be interested in a potential co-investment if you do the bridge round. Let me know when you’ve got a lead.
Intro to the VC
XXX, hope you’re well.
Wanted to connect you with Alex from [startup]. I’ve known Alex for a little. See email below for additional context. [VC] could be interested in co-investing in this round, but wouldn’t lead.
Alex, please meet [VC name] from [VC].
Will leave it to you both to connect directly.
If your company is awesome, the intro came through a great contact and your material is on point, then one email is enough. However, it doesn’t hurt to get more than one.
Ideally you want to make it seem like serendipity rather than you purposefully trying to get 6 people to make an intro. It can seem a little weird to get 6 intros in a short period of time, particularly with the same email template you send. I don’t know the best way to manage multiple introductions tbh, but I know I have done it. No one has made a big deal about it and I try play it down and focus on getting to the point as fast as possible (people are too busy to dwell on this stuff.).
I do think multiple introductions can be useful so that you keep getting talked about and heard since it’s social proof. But more powerful than introductions is the grape vine; having people in the social network of your target talk about you to them.
At one company we were doing really cool stuff and everyone was talking about us. A partner at a fund said “I have never heard so many people mention your startup, so I had to know more.”
Nivi at AngelList backs this up with his own story:
“It happened to me this week. I met with Reshma who runs seedcamp, the european version of Y Combinator, on Monday and she told me about Zemanta which came out of last year’s seedcamp. Then I saw this blog post about Zemanta on Techmeme the next day. And then on Thursday, Alex Iskold, founder of our portfolio company Adaptive Blue, introduced us to Andraz, one of the founders of Zemanta.
“Three hits in one week is absolutely a “pay attention” notice. So this morning I am trying Zemanta out. The image and most of the links in this post were automatically provided by Zemanta.”
Understand this is earned mentions which is far more powerful than introductions. When people mention your company it’s not for an ulterior motive. When you ask for an intro you are stating an intent which carries less weight. A combination of the two is the optimum.
Bill Kaiser of Greylock once said:
“when I hear about a company once, I often ignore it, when I hear about it twice, I pay attention, when I hear about it for the third time, I take a meeting”.
LinkedIn is basically your friend here. You need to use it actively and regularly for any of this to work. You need to have started a few years earlier though, since you need to have contacts in the first place. But honestly, you have head damage if you aren’t using LinkedIn already. I personally hate it, but there is nothing else.
Here are the steps to find people to make an intro:
Let’s say I want to raise for an enterprise Machine Learning (“ML”) company. I make a list of all the investors who invest in enterprise and probably ML. VCs are a firm of partners. I need to find the partner I want since that is the person who is going to get the deal done and that I will have to deal with. So let’s say I want Blue Shirt Capital. I search Blue Shirt Capital + ML in google. I see Martin recently joined and is highly technical. There is a press release about his last AI deal. It looks cool and is not a competitor to me. I check the Blue Shirt site and check they haven’t any announced deals that are competition. I also check their investment mandate (there isn’t one normally) but I know they do see deals and have a global mandate. Cool beans.
I go to LinkedIn and search for Martin + Blue Shirt. I find his profile. We have 13 shared connections. Okay this is a promising start. It doesn’t look actually like I have any super strong relationship to him though. I pause, and start looking at other partners of the firm; how many connections do I have with them and how close are they? If I can get a solid intro to another partner, then maybe I can use that and try and get Martin afterwards. I check the other partners and I have more connections, but no one really stands out. I decide that I am going to focus on Martin.
There are a number of high-profile investors and I don’t want to ask them for an introduction to another investor. That doesn’t make sense right? I see that I know four founders and one investor in another country. I am not necessarily best of friends with all of them I know them well enough to ping them a message.
I write out a template message in Word which summarises why I specifically want an introduction to Martin, and enough information for that person to realize that it will not be embarrassing for them to introduce me at all. This is a few lines on why my startup is cool. In fact they may even look good. I know they want to build credibility too.
I click on each profile and on the message button. I paste in that template message and change that for the 5 people I want to message. This basically means adding in their first name and some other personal, social comment, so it doesn’t look like I am just trying to extract value, but that I actually care about them. It is very important to always so that you care about people.
This message looks something like:
Happy new year! Saw you got featured in VentureBeat! Congrats that is really cool. Hope the kids are doing well.
I saw that you know Martin at Blue Shirt. He invested in three other artificial intelligence companies I respect and knows a lot about this field. Most investors don’t get enterprise and he seems to be the best fit at Blue Shirt.
To update you we are building an amazing machine learning startup which has got some pretty cool traction, we are starting a project with x, y, z companies to implement our tech. We are starting our fundraise process and I would specifically love to have him as our lead.
I don’t know how close you are, so can you kindly let me know if you are best placed to make an introduction for me with a view to them investing? Absolutely no worries if it does not make sense. You need to manage your relationships.
If you think we would be a fit for them, I would be happy to send you an email you can easily forward Martin (I’ll do all the work! Ha).
I’m lazy so I write templates. I am however totally anal about curating each email to the recipient. One mistake will blow up in your face. I triple check everything before I press send. In particular check I spell people’s names. That is a cardinal sin.
I press send. Richard responds a day later and says he doesn’t know Martin well. He could make an intro but there could be better people to do so. I thank Richard and ask him about the details of his traction so start a new thread.
I wait and see what the other 4 people respond. It turns out that 2 more don’t know him at all. They connected on LinkedIn and never chatted. Crap.
One person responds positively. They are both French and know eachother from Paris. Cool. I thank Pierre and ask him if firstname.lastname@example.org is still his email.
I have a template intro email written. I open up Outlook (I stopped using Polymail) and paste that in. I add Pierre’s name and proof the email. I send it to Pierre. He forwards my email with his comments on the top. Martin reads messages back to say he is happy to take the intro. Pierre responds and makes the intro.