As the global pandemic continues, companies seeking funding are faced with the challenge of connecting with potential investors at a time when in-person meetings, pitches, and networking simply isn't possible. The good news is that many investors are still on the hunt for investment opportunities.
So how can you position your venture to get noticed by active investors now?
Identify Appropriate Partners
By matching your business to the interests and expertise of potential investors, you can save yourself a lot of time and energy.
"It's important to understand the life cycle of your company and the check size you are looking to obtain," says Ben Futoriansky, an associate with venture capital firm Canopy Rivers. "When researching which investors to target, look for factors such the life stage of a company they typically invest in (is it Seed, Series A, or growth?), the average check size (is it $500,000, $2 million, or $100 million?), and when the last time was they raised a fund."
Empathize With Investors
Being pushy won't get you anywhere, now or later.
"These are difficult times for everyone," Futoriansky says. "Understand that investors are either actively engaged with portfolio companies, re-engaging with companies they've previously had interaction with, or receiving many cold emails."
Do Your Research
To put together a list of potential investors who match your funding need and company life stage, use several resources, says Futoriansky. Pitchbook, Crunchbase, and venture capitalist blogs are good places to start online.
Armed with your list of investor targets, take steps to connect with them, and to continue to add to your base of potential funding sources.
Tap into your network. Michael Stern of Empowerment Capital has found that the best startups "are usually introduced to us by existing investors." Consequently, he advises companies in search of capital to "work their networks." Find out who you know who may also be connected with someone on your target investor list.
Don't avoid cold pitching. While a warm introduction is generally more effective, cold contacting potential investors can also reap rewards, Stern says. He mentions that a company that recently pitched him after seeing his firm's name in a newsletter article about investors may soon receive funding. "The market rewards entrepreneurs who hustle," he concludes.
Join communities. Similarly, Oren Greenberg of growth marketing agency Kurve recommends ThisWeekinStartups as "the best place to find investors." It's in those communities that founders and investors can connect and casually explore if there might be an opportunity for support.
Search Twitter for leads. OwnTrail co-founder and CEO Rebekah Bastian reports that "there have been some valuable lists and threads of active investors (both angels and VCs) circulating on Twitter. If you're looking to add fresh leads to your investor pipeline and have the time to look through these, go for it."
Consider crowdfunding. Dan Bailey, president of WikiLawn Lawn Care thinks "finding investors now is next to impossible." The reason has less to do with your business and more to do with the economic environment right now, he points out. "It's not a safe financial decision for many investors to tie their money up in small businesses right now when we have no idea how those businesses will recover."
"Rather than approaching individual investors, I'd highly recommend crowdfunding," he says. Among those he's exploring are WeFunder and Fundable. He says Kickstarter and GoFundMe could be options, too, depending on your business model.
Brian Belley, founder of Crowdwise and VentureWallet, also recommends equity crowdfunding because "equity crowdfunding deal volume actually reached its highest amount ever despite the pandemic for WeFunder in March." Belley believes equity crowdfunding "is definitely proving to be an effective way for businesses to connect with investors," because you aren't limited to a particular geographic area, and participating doesn't require travel and in-person meetings. He sees this option as "truly game-changing, not only unlocking capital for entrepreneurs, but allowing non-accredited investors to finally be able to diversify and invest in early-stage businesses."
Although in-person contact with potential investors is prohibited at the moment, there are still plenty of steps you can take to identify promising investors and introduce your company, knowing that while some investors are currently holding onto their cash, not all are. In fact, some are taking advantage of this period of reduced competition to make smart investments in businesses with superior long-term potential.