Startup founders have to reach out to around 40-60 VCs and 100-150 Angel investors to get funding from 1-2 VCs and a few angels. The conversion rate is about 7.5% in the best-case scenario.
As we all already know, warm intros are the best way to get attention from investors. Getting someone from your network to do an intro to VC or ask founders in their portfolio about an intro could work well in many cases.
However, the majority of founders have a very limited investor network and have to rely on cold emailing in the first place. Writing an effective cold email to investors can be challenging and we see early-stage founders, as well as more mature businesses, making common mistakes in this process.
Things not to do
Some of the most common mistakes that startups make when cold emailing investors include:
1. Emailing the wrong investor
Make sure to research the investor and their investment thesis and preferences. Sending out emails to the wrong investors isn’t working and distracting you from qualitative contacts.
2. Sending bulk or impersonal emails
Investors receive a lot of emails, so it is important to make yours stand out by being personal and tailored to the specific investor. Bulk emails without personalised messages go to spam or never attract investor attention.
3. Missing validation of your product
An investor does not invest in total unproved products, you need to have a signal and point it out in your email — good overview of the signal provided by OpenVC.
4. Using Last Name
Use the first name of your contact, e.g. “Hi Michael”.
If you’re writing to a generic address, like dealflow@indexventures.com, refer to them as “Hello Index Ventures team”.
If you email angel, who is a Doctor, so Dr Last Name is more appropriate. Also, some countries could have special social norms but usually addressing a person by their first name in a venture industry is absolutely fine.
6. Appologizing for the email
No need to apologise as you already reached out. Now make an investor happy that you did.
7. Not following up
If you don’t hear back from an investor, don’t be afraid to follow up. But make sure to do so in a respectful and professional manner, and avoid sending multiple emails if they do not respond. The best way to follow up is to send a well-written Investor Update. Investor Updates are your secret weapon for raising venture capital.
8. Using non-professional email addresses
Don’t use generic email addresses like “gmail.com” or “outlook.com” to cold outreach to investors. At this stage, you need to have MVP and the company website.
If you don’t have it yet, so you are not yet at the stage to cold email an investor, this is a stage where you need to be communicating with your friends and family and close network.
Email should come from CEO or other Founder, don’t hire intermediaries to do investor outreach for you, especially on the early stages
9. Emailing to most wanted investors first
Over time, you will get better with your value proposition and bullet points, most likely, this will happen after a couple of first meetings with investors. Keep your favourite, most wanted funds and investors in the button of your pipeline. You have only one chance to make a first impression, don’t waste it.
10 Tips to write an effective cold email
1. Keep it short and to the point
Investors are busy, so keep your email concise and focused on the key information that they need to know.
To maximize the chances of a reply, keep the email body under 1,000 characters. This is a universal rule – the longer the email, the less likely the investor is to respond. You only have a few seconds to make a good first impression, so it’s important to make the most of them. Keep your email pitch concise and focused, and aim for it to take no more than 1 min, usually 30 sec to read.
2. Use a short and compelling subject line
Your subject line is the first thing that investors will see, so make sure it is attention-grabbing and relevant to their interests.
The email subject line should be under 60 characters. e.g. “B2C Freelancers Marketplace – +40% MoM – Seed – US”
The subject line should consist of thesis fit, traction/signal, funding stage and country, and company name (not necessary but useful). Examples of the thesis fit: “Hydrogen storage” for the Climat Tech fund, “SaaS for retailers” for the SaaS fund, “AI for copywriters” for AI or Martech fund.
3. Introduce yourself and your company
Get straight to the point. Start by introducing yourself and your company value proposition, and explain what you do in a clear and concise manner.
Use very simple words to explain what your company does and what problem it solves. Keep it very short – 10 words max. Avoid complex sentences.
4. Use bullet points with your achievements
Summarize business achievements and traction figures – important things that establish credibility (IP, signed POs, LOIs, key partnerships).
Instead of making vague statements like “ga significant growth”, provide specific numbers to support your claims. For example, “MRR has grown 30% MoM over the past 6 months.”
5. Explain why your company is a good fit for the investor
Next, explain why you are reaching out to the investor and what you have in common, refer to their thesis that fits your profile and similar portfolio companies (but not competitors). Personalisation is key to a good response rate,
Go further and find a partner in the VC who is specifically in charge of your sector.
6. Add information on your funding round
Indicate how much you are raising, any commitments or lead investors, if you have commitments for how much is left in this round and when you target to close.
Avoid adding your valuation, especially if you don’t have specific commitments and any term sheet yet.
7. Insert link to pitch deck
Include a link to your pitch deck. The link should be trackable so you can review who accessed your pitch deck. You can use Quoroom platform to generate a trackable link with the access settings that would require an investor to enter an email address to access the document.
Don’t ask if you can send your pitch deck in the next email, send it here in the initial email. Not including the pitch deck link is a waste of time and annoying for investors.
8. End the email with a clear Call to Action (CPA)
Finish your email with a clear call to action, such as asking the investor to schedule a call or meeting to discuss your company further.
Instead of closing your email with a weak call to action, such as “I’d love to hear your feedback and advice” or “Would be great to discuss a partnership,” go ahead with the strong CPA: Would you be available for a quick intro call? Or simply, “Looking forward to hearing from you”.
9. Proofread and edit carefully
Before sending your email, make sure to proofread and edit it carefully to ensure that it is free of spelling and grammar errors.
Keep your signature short, no need to add all social media, only your Linkedin matters and the link to your business website really matters in your email signature.
Also, void stuffing the email with links and images, as these can distract the reader and trigger spam filters.
It’s not just about proofreading emails but also your deck, make sure you did it.
10. Ask for feedback
Actually, be careful with this one, you usually ask for feedback if you already have a dialogue, usually after a call.
If the investor answered that they are not a fit, so usually it’s true. If you know from their thesis that you actually meet their criteria of the stage, sector and geography, ask them what you have to achieve in order to meet their criteria.
If an investor is not answering, the best is to send an Investor Update with your achievements and metrics.
Cold Emails Works
Actually, investors love it, of course, when an email is well-structured and relevant to their firm.
Cold Email Examples
The good structure provided by OpenVC templates:
Here are more good templated by OpenVC database.
Finally, listened to a video by Michael Seibe, Y Combinator CEO and Partner, to learn how to Cold Email Investors.
Quality vs. Quantity
Cold emails can be an effective way to get a meeting with investors and pitch your business or idea. However, it’s important to remember that cold emailing as well as fundraising in overalls it’s not a numbers game, quantity matters significantly more.
Warm introductions from mutual connections are always better, but even with warm introductions, founders can make mistakes, such as not following up with investor updates after the initial conversation.
The Quoorom platform was designed to help founders at all stages to do the investor communication right, from email outreach to matching with the investor thesis, preparing investor updates and more. Try Quoroom for free and book a free consultation with our team.
Photo credit to Glenn Carstens-Peters
