editione1.1.4
Updated September 15, 2023You’re reading an excerpt of The Holloway Guide to Raising Venture Capital, a book by Andy Sparks and over 55 other contributors. A current and comprehensive resource for entrepreneurs, with technical detail, practical knowledge, real-world scenarios, and pitfalls to avoid. Purchase the book to support the author and the ad-free Holloway reading experience. You get instant digital access, over 770 links and references, commentary and future updates, and a high-quality PDF download.
Love it or hate it, much of the venture capital industry depends on so-called warm introductions—that is, connecting with an investor via a third party who knows both of you. Many investors view a founder’s ability to wrangle up a set of warm introductions as an indication of how successful they will be at connecting with future hires and customers. The purpose of a warm introduction is to show an investor that someone out there is willing to put their own reputation on the line by introducing you. They’re vouching for you, and they’re taking the time to help you out.
controversy A warm intro from a close friend or colleague never hurts.* But not everyone agrees you need to be close with the person making the intro. So long as the introduction is credible, it can be a good start, even if it’s not necessarily an endorsement.*
But others, like Homebrew investor Hunter Walk, say that an introduction from someone who doesn’t really know you does not work in your favor. Better, Walk says, is a powerful cold email.* Yes, a well-worded and personalized cold email to an investor can yield success when you’re trying to raise a seed round.* Venture capitalist Arlan Hamilton has also spoken about the power in reading cold emails from founders—some VCs see it as a way to open the playing field to first-time founders who are underrepresented in venture capital networks. From her own experience, Hamilton offers advice on crafting the perfect cold email to investors.
Here’s a brief excerpt from a Recode interview by Eric Johnson with Freada Kapor Klein, of Kapor Capital, who explains why the cold email can benefit investors and founders alike:
Klein: There are many practices in VC that are inherently biased. So this notion of a “warm intro,” and we’ve seen many a famous VC make public statements about “if you can’t figure out how to get a warm intro to me…”
Johnson: Screw you, right?
Klein: Yeah, “screw you. We don’t want to talk to you.” Well…
Johnson: You can see that’s very obvious how that would limit the pool of people?
Klein: Completely. Your zip code isn’t close enough to mine. It’s completely biased, and it’s confusing accidents of birth with accomplishment.
Johnson: You’d get rid of the warm intro.
Klein: Get rid of the warm intro. What’s really interesting is we’ve gotten rid of the warm intro. People can send us their pitches directly over the website. We have invested in companies whose pitch decks come in over the website and none of us know anybody who could’ve introduced them to us. And they are businesses that meet our investment criteria.
Many firms who appreciate the power of the cold email will say so on their websites, or have a portal for cold submissions. Jane VC is one such firm actively campaigning for cold pitches from women founders.*
important If you go with a cold email, make sure you’ve done your research and tailor your pitch to the investor’s interests and preferred method of communication. Use all of the same strategies we lay out next for designing a great email. Like any email to investors, a cold email should be clear, concise, and complimentary, including:
A short introduction of yourself and your business.
Why recipient is a fit to help. Connect to them and show you have insight into their strengths and have done your research.
A clear request.
If you’re sending cold emails to investors, it’s still valuable to make connections and build your network! The founders, investors, and other players you connect with can help you find the right investors for you, and answer a lot of questions along the way.
As you begin reaching out to investors, how confident they perceive you to be is directly correlated to how successful you are at getting these crucial first meetings and ultimately delivering a pitch that investors can’t walk away from. Remember, at the early stages, investors are investing in you and your team more than in your idea or company. When it comes to pitching, whether it’s in an email trying to get a meeting, or over coffee, or in a conference room at a firm, investors need to believe you’ll move heaven and earth to turn your vision into reality.
While we can’t anticipate what the recipients of your emails or the rooms you walk into will be like, there are a few strategies for projecting confidence that can actually help you build real confidence in yourself, your company, and your ability to capture investor interest. Strategies for projecting the right amount of confidence are not a one-size-fits-all formula. But a few pieces of guidance to consider will help you figure out—along with a good amount of trial and error—what works best for you.
Nail your story. Getting a grip on the story you’re telling investors is one of the ways you can actually build your confidence—if you believe in the story, someone out there will too. Storytelling and confidence are a double helix of skills that, if mastered, can be used to emotionally hook investors on wanting to be a part of the future you’re creating. We help you build your company story in Designing Your Pitch.