StartUp Founders: Cold-Email Investors The Proper Way
Many founders struggle with raising funds, particularly when they lack a network or savings to bootstrap their business. In this scenario, founders often have to rely on cold emails to reach out to potential angel investors. While it may be challenging to secure funding through cold emails, it’s not impossible.
To start, use a CRM to manage conversations. While it’s a one-to-one game, it’s also a volume game, and it’s important to track and measure your progress. Whether you use HubSpot, Airtable, Excel or even Post-It notes, it’s crucial to keep track of responses and maintain a good cadence. As an entrepreneur, it’s essential to execute in a way that allows you to measure and manage your progress.
Next, pay attention to the content of your email. Within the first five words, even though it’s a cold email, show that you’ve done your research. Understand who the investor is, what they’ve invested in, and why they should read your email. This shows that your email isn’t spam and makes it more likely that the investor will continue reading. You can mention where you saw them or their investments, and why you think your company aligns with their interests.
According to Mike Maples, Founder and Partner at Floodgate, “The best cold emails are those that are personalized and relevant. For example, it’s much more effective to say, ‘I saw you invested in X and I think our company Y is also in the same space,’ rather than a generic ‘Can you invest in my company?’”
Focus on the problem statement, not your solution. Talk about the problem that exists in the marketplace and how you believe that the investor can help further size the market. Be sure to provide data that shows that this is a bigger problem than they may realize, and that your company is positioned to address it.
Finally, show how you have done an incredible amount of work to get where you are, and that you are worthy of a response. Show how you have validated and mitigated risks, and demonstrate that you are not just someone with a good idea. You must prove that you are a person who can execute and deliver results.
One example of a company that successfully used cold emails to raise funds is Casper, the online mattress retailer. According to Philip Krim, CEO of Casper, “We sent about 1,200 cold emails to investors before we got any traction, and eventually raised over million. The key was personalization and demonstrating that we understood the investor’s interests and why we believed our company was a good fit for them.”