In the fast-paced world of VCs, where the average clock rate of finance email engagement stands at a mere 2.72% (as reported by Mailchimp), capturing the attention of venture capitalists (VCs) becomes an arduous task. With VCs receiving an average of 12 pitches per day, it’s crucial to stand out from the crowd. To enhance your chances of getting an investor to actually read your email, we have curated a comprehensive list of dos and don’ts.
The 2 Essential Steps Prior to Contacting an Investor
Are you VC fundable?
Before sending that email, take a step back and assess if your startup is VC fundable. Not all startups are suitable for VC investment, and that’s perfectly okay. Typically, VCs look for high-growth startups that have the potential to provide significant return on investment.
Research and Understand the Investor’s Thesis & Profile
Before hitting the send button, it’s crucial to familiarise yourself with the investor you’re targeting. Learn about their investment history, the sectors they are interested in, their funding stage preferences, and the geographical regions they operate within. Checking the compatibility between your startup and the investor’s preferences can save both of you a lot of time.
Once you have identified potential investors, dig deeper to gather more information about them. Use platforms like LinkedIn, Twitter, and the investor’s personal blog or website to understand their investment philosophy, recent investments, areas of interest, and personal tidbits that you could use to personalise your email.
Investors usually have a clear focus when it comes to the industry, stage of the business, and the type of business model they prefer. This will help you shortlist potential investors who are more likely to be interested in your business proposition. If your startup doesn’t align with their investment focus, there’s a high probability that your email might be ignored.
Now you’ve identified your list of potential investors, let’s craft the perfect email.
Your email subject should be short, specific, personalised, and clear. It should hint at your startup’s achievements or potential and align with the VC’s interests. Avoid hyperbole and keep it professional.
Personalise Your Email Based on Your Research – inc positive signal
Once you’ve researched the investor and verified alignment with their investment focus, you should be equipped to craft a personalised email with a strong positive signal.
VCs love validation. Whether it’s impressive user growth, strong customer testimonials, or a robust, experienced team, having positive signals can provide that much-needed credibility and pique a VC’s interest.
And while a generic email can come off as impersonal and spammy. If you mention some of their past investments you admire, refer to a recent keynote they gave, or mention a shared connection or interest, it shows that you’ve put in the effort to understand them and their investment strategy.
Craft an Engaging Subject Line
The subject line is the first thing your recipient will see and should compel them to open your email. Make sure it succinctly summarises your business proposition and stands out from the generic “Investment Opportunity” emails they likely receive often.
Keep it short, the complete text should be easily readable when viewed on a mobile phone notification.
Let’s start with some great examples of email subject lines:
1. “PropTech startup| 300% YoY growth | Exited Founder | Seed investors wanted”
2. “AI in healthcare: Improving patient outcomes by 5x while reducing costs 250%”
3. “Tim Draper-backed Fintech – 500K users – Exited founder – Series A”
4. “E-commerce logistics startup | $1M+ ARR | Seeking strategic investor
These subject lines are compelling because they concisely convey what the company does, mention a key success or growth statistic, and they state the type of investment being sought.
Here are some examples of bad email subject lines:
1. “Investment Opportunity”
2. “Please read this”
3. “Funding required for startup”
4. “Can we talk about my business?”
5. “Looking for an investor”
6. “Invest in us!”
7. “10 minutes of your time”
8. “100X ROI investment opportunity”
These subject lines are ineffective because they are too vague, lack specificity, and do not convey what the business does or why the investor should be interested. They don’t showcase any unique value proposition or indicate the stage of funding the startup is in. These factors reduce the chances of the email being opened, let alone securing interest from the investor.
Keep Your Email Brief and Direct
Your email should be concise, clear, and to the point. Start by introducing yourself and your company, then briefly describe what your business does and why it is unique. Remember to provide some compelling numbers or data that demonstrate your business’s traction. And use bullet points.
Write an email body that gets your pitch deck opened
The body of your email should succinctly explain your startup’s value proposition, why you’re reaching out to this specific VC, and what you’re looking for. Your email body should be concise, respectful, and intriguing. Highlight key achievements, provide a clear call to action, and attach your pitch deck.
Share a pitch deck that gets an investor reply\
A good deck tells a compelling story, is visually appealing, and is easy to digest. Let it demonstrate your startup’s value proposition, show market potential, and introduce your team. It should also explain your revenue model and provide financial forecasts.. In contrast, a bad deck might be overly detailed, unstructured, or lacking crucial information.
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You can dive deeper into your pitch deck’s potential and decode your investor appeal with our Scorecard – a comprehensive tool that objectively assesses your startup’s potential, identifies areas of strength and improvement, and provides actionable insights. Understand where you stand and strategically enhance your appeal to secure the funding you need.
Clearly State Your Call to Action
What do you want the investor to do after reading your email? Whether it’s providing feedback, expressing interest, or scheduling a call or meeting, make your call to action (CTA) clear and easy to follow.
Avoid Triggering Spam Filters
Avoid using phrases and keywords commonly associated with spam. Also, ensure that your email address is verified, use SPF and DKIM records to ensure your email’s authenticity, and maintain a low bounce rate.
Phrases that founders should avoid using when emailing VCs as they might be interpreted as spam or make the email seem less professional:
Guaranteed success: Venture Capitalists understand that investing in startups involves risk. Promises of guaranteed success can seem overconfident and naive.
This is a unique opportunity: The phrase is overused and may trigger spam filters. It’s better to explain why your startup is unique in tangible terms.
Once in a lifetime Similar to the phrase above, this is a cliché and might not be taken seriously by experienced investors.
Get in now before it’s too late: This creates a sense of urgency that may come off as desperate or manipulative.
Huge return on investment: Without providing specific numbers or data, this phrase can seem empty and potentially misleading.
Trust me: Trust is earned through consistent actions and evidence, not simply asked for.
We will be the next [successful company]: Comparing your startup to successful ones (like saying “we will be the next Amazon or Google”) without solid facts can appear presumptuous.
Please forward this: Asking the recipient to forward your email to other VCs or their contacts can be seen as unprofessional and desperate.
Help: This word can make your email sound desperate and might get caught in spam filters.
Confidentiality assured: This may seem suspicious as professional VC firms always maintain confidentiality.You want to sound professional and show that you understand the business and the risks involved. Be concise, and let your business plan and growth strategy show your potential value instead.
Show You’re a Good Fit
Highlight why your company aligns with the investor’s investment thesis. Show that you’ve done your homework, and your company fits their investment criteria.
Here’s a simple template you can start with:
Subject: [Your Company] – [Unique Value Proposition] seeking [Funding Amount]
Hi [Investor’s Name],
I am [Your Name], the founder of [Your Company], a [Your Industry] startup that [What your company does].
I came across [something about the investor] and felt that our company aligns well with your interest in [Investor’s area of interest].
Our current traction:
- [Mention significant achievement or compelling metric].
- [Mention significant achievement or compelling metric].
- [Mention significant achievement or compelling metric].
This had been achieved by a team of [Number of team members] that has previously [talk of your team’s achievements prior to this startup, use numbers where you can]
We’re currently seeking [Funding Amount] to [What the funding will be used for].
I would appreciate it if you could take a look at our pitch deck attached and provide your valuable feedback.
Looking forward to hearing from you.
Remember, while this template can serve as a starting point, the most successful cold emails are those that are personalised and tailored to the recipient.
Ensure your email is free from typos and grammatical errors. Use a professional tone and refrain from using overly casual language. While you want your passion for your business to shine through, remember that this is a business communication.
Use Your Company Email
It’s important to send the email from a company email address, ideally one that includes your name, to establish credibility and professionalism.
Make your email not just about asking for funds but also about offering value. Whether it’s an opportunity to be a part of the next big thing in your industry, or an idea that aligns with the investor’s interests, make sure they understand what’s in it for them.
Send and Track Your Email
Use email tracking tools to monitor if and when the investor opens your email, how many times it is opened, and if any links are clicked. This will help you measure the effectiveness of your email.
Email tracking systems are tools that allow you to know if and when your emails are opened, and what links are clicked within your emails. They can provide critical data on email engagement and can be particularly useful when sending cold emails to investors or prospects.
Here are a few examples of email tracking systems:
HubSpot Sales Hub: This tool is a part of the HubSpot ecosystem and provides email tracking as part of its service. It notifies you when an email is opened or a link is clicked. It can also schedule emails and provides a document tracking feature.
Yesware: Yesware offers tracking for emails, presentations, and pageviews, providing data on when your emails are opened, where they’re opened, and on what type of device. It can also show you if your attachments are viewed and for how long.
Mailtrack: This is a simple email tracking solution that integrates with Gmail. It tells you if your emails have been read and how many times they were opened.
Streak: Streak integrates directly with Gmail and is particularly helpful for CRM purposes. It provides information on when and where your email was opened.
Mixmax: Mixmax is another tool that offers powerful analytics, including tracking opens, clicks, downloads, and replies. It also provides features for scheduling emails and creating sequences.
BananaTag: BananaTag allows you to track emails, schedule sends, and create email templates. It can be integrated with both Gmail and Outlook.
If you haven’t received a response after a reasonable period, don’t be afraid to follow up. Be polite and persistent, but not annoying.
Follow up 3 business days after the first email is sent and then 4 business days later.
Remember that investors are busy people and might take time to respond. Be patient, and while it’s okay to follow up again after a week or two, avoid sending multiple follow-up emails in a short period.
Writing an effective cold email to potential investors is more art than science. It requires a thorough understanding of your audience, clear and concise communication, and a touch of personalisation to make your email stand out. The steps and template provided here will give you a good starting point, but remember that the most compelling email will be one that tells your unique story and shows why your startup is a worthy investment.
As you embark on your journey towards securing VC funding, remember that the path may be challenging, but it can also be rewarding and transformative. The art of writing an effective cold email to investors is a crucial first step, and we’re glad you’re prioritising it. We hope that our guide serves as a valuable resource for you in crafting compelling and personalised emails that grab the attention of prospective investors.
At The200BnClub, we understand that the process doesn’t end at sending cold emails. We’re here to help every step of the way, from refining your pitch deck to preparing for potential meetings with investors. Our accelerator program offers an array of services designed to maximise your success in the fundraising process. So whether you need help perfecting your pitch, understanding investor responses, or navigating through the investment landscape, you can count on our expertise and commitment. You can apply to our program here.
We wish you the best of luck with your VC outreach. May your passion and innovation resonate with your potential investors, and may your entrepreneurial journey be filled with success, growth, and valuable learning experiences.
Other materials https://odetocoldoutreach.notion.site/An-Ode-to-Cold-Outreach-6d7dd3ba3f5844188158d31dee7c36eb