Managing a startup is complex, with many moving parts, and you need the proper funding to keep your momentum moving. Funding your startup can take a lot of investors over time and different funding rounds to keep building your company and transform it into a successful operation. Every startup differs in how the funds are used, how much is needed, and how long they last.
It's essential for every founder during every round of funding to calculate the budget and determine where every dollar will end up and with a realistic timeline for how long that funding will last. The ideal timeline for securing capital is to start networking within 6 months of the startup runway or 6 months until your funding runs dry.
Securing the next round of funding is vital to keep your startup advancing and growing. In fact, networking with investors is vital to help startups get the funding they need. Raising a round takes three to six months from the first conversation to money in the bank, and that assumes things go well.
This stresses the importance of creating genuine connections through networking that can be vital in ensuring the success of your startup. Networking doesn't have to be awkward or challenging. You can learn how to successfully network with the right community by understanding who you're networking with and how to do it right. Here are some tips to help you create connections with investors that can lead to a blossoming founder-investor relationship every startup strives to achieve.
Why Is Networking Important?
Networking is a powerful way to grow your business beyond building up an investor portfolio. Networking is attending meetings, conferences, and tech networking events, cold calling or emailing, connecting on social media, and any way you connect with professionals in your industry. It can be a beneficial way to have short and long-term impacts. You can increase your resources, network, knowledge, and opportunities by networking with key individuals.
With networking, you can build a network of support by building relationships and creating business friendships that can help you manage the ups and downs of building a startup. It can also lead to more opportunities to connect with more investors and business partners. The bigger your net, the more chances you'll be able to expand your ability to secure funding and get everything you need to create a successful startup.
Networking Tips for Successfully Building Connections
Fundraising can be challenging enough as it is. Much of the work is managing relationships and extending your network by connecting with and finding qualified investors for your startup. You can follow these networking tips to help you connect with the right people and improve your odds of securing that next round of funding before you run out.
Prepare Your Elevator Pitch
Investors are always busy and have tight schedules. Plus, they have had hundreds of meetings and encounters with founders, all with the same goal: obtaining funding. You have a small window of time when you're networking to introduce your startup, so you want to make your point quickly and efficiently. You have to draft up a quick 30-second elevator pitch that sells your startup. In that short time, you have to introduce the problem, how your startup can solve it, and how it differentiates from its competitors.
Start With Your Current Network
You've likely begun to build a network no matter your startup stage. Whether it's reconnecting through LinkedIn or reaching out through direct messages, phone calls, or announcing that you are looking into funding for the next round. Reach out to your friends and colleagues. You can ask if they know anyone that might be interested in learning more about your startup and potentially be willing to meet up.A warm introduction from a founder who recently raised carries far more weight than a cold email ever will. Their lead investor already trusts them, and that trust transfers. Your startup lawyer and your accountant are worth asking too, since they usually know exactly which investors are actively writing checks right now.
Understand The Different Investors
Different types of investors are willing to invest in particular rounds for your startup. There are angel investors, venture capital firms, bank loans, and more. Before you begin to network, you will want to ensure you understand the different types of investors to identify the best investor for where you are at with building your startup.
Build an Investor Profile
Once you have a basic understanding of all the investor types available and can make an informed decision, you want to get more detailed. Build an investor profile on what an ideal investor for your startup would look like. You may have been working closely with investors for years, so you want to be sure to detail all the traits that would benefit you and your team and that they align best with your values to ensure the relationship between founders and investors is a positive experience for all parties involved.
But Don"t Narrow Down the List Too Much
While finding the ideal investors is an essential part of the process, you don't want to limit your networking too much. After all, it never hurts to build a relationship with any investor if you are in the early stages of development. These relationships can be the foundation for a perfect fit for later rounds like a Series A or Series B funding round. If you build a relationship now, you may be able to lean on these investors for resources and help as you grow.
Use the Right Platform
Depending on the type of investor you decide would be best to work with your startup, you'll want to ensure you are working on the right platforms. Investor databases let you narrow the field before you spend a single hour networking. AngelMatch lets you filter 125,000+ angel investors and VC firms by sector, check size, investment stage, and location, so the people you reach out to are already the right fit for where your startup is.
Start Creating a List
Keep track of every investor you make contact with throughout all processes. You're going to meet with dozens, even hundreds, of investors throughout the early years of your startup. You'll want to keep an updated list of people you've spoken to, who has agreed to meetings, and who has ultimately turned you down.
Research Investors
Once you start scheduling meetings with investors and even long before when you're still networking, do your homework on each investor. Look into their values, interests, and backgrounds, and see if they have any preferences when it comes to the startups they choose to invest in. When you understand the inner workings of each individual investor, you can customize your pitch deck to better appeal to that specific investor. With a customized presentation, you can appeal to their preferences and increase your success in securing funding for your next round.
Attend Conferences
You will have more opportunities to connect with people in your industry if you attend conferences relevant to your startup. Conferences offer a great opportunity to network with professionals in your industry that can be potential investors, business partners, or other founders. You can create strong connections with people that you think may be a great fit for your startup.
Include Data in Your Presentation
Investors want to fund startups that have the potential to provide significant returns and have a solid exit strategy built in. You want to paint a clear picture for your startup's growth using realistic projections and data to help back your plans for success. You want to avoid going overboard. Too much data and you can end up boring them and causing them to lose interest in your presentation. But be sure to keep data on hand in case they want to dive deeper and ask questions.
Remember to Focus on the Relationship
It's easy to get lost in focusing on only trying to secure funding. You end up providing the information up front to the investors causing you to focus on the transaction rather than the relationship. Relationship building is critical to closing deals, and you want to introduce yourself as you would when you meet a friend.
You want to appear approachable and really lean on humanizing yourself before you lead into the elevator pitch. Trust the process in that the conversation will eventually give you an in to introduce your startup and lead to asking to connect with them later to go over your startup in more detail.
Networking can be complex, stressful, and overwhelming. You can create a system that tracks who you speak to while researching every investor you hope to work with. Implementing many of these tips can help secure funding more efficiently and quickly. You can develop strong relationships with investors and professionals in your industry even if they don't invest. They can provide resources and help you extend your network further, helping keep your startup growing and ensuring its success.
Ask for Advice, Not Money
When you're six months out, the temptation is to lead with the ask. You want to resist it. Investors can sense urgency, and urgency reads as risk.
Instead, frame your first conversation as a request for feedback. Present the problem you're solving, show them what you've built so far, and ask for their opinion on the market. You end up getting real input, and they get to see how you think without feeling like they're being sold to.
Most investors want to watch a founder operate for a while before they write a check. Giving them a low-stakes way to do that is often faster than asking directly.
Prepare for Instant Due Diligence
Investors who move fast will want to see proof of viability just as fast. If you're running short on runway, you can't afford to spend two weeks assembling documents after a good meeting.
You want a short teaser deck ready to go, ten slides at most, showing your metrics, early traction, and revenue. From there, build a simple data room with your financials, cap table, key contracts, and articles of incorporation all in a single shared folder you can grant access to in minutes.
The founders who close quickly are almost always the ones who had all of this ready before they needed it.
Extend the Runway You Have
Networking is only half the job. While you're building those relationships, you also want to buy yourself more time.
Cut what isn't essential. Non-critical subscriptions, renegotiated leases, and a hiring freeze can add weeks to your runway without touching the product. Some founders will also look at revenue-based financing or venture debt to bridge a gap, which lets them avoid giving up equity in a rushed raise.
Every month you add is another month of relationship building before you have to ask for anything.
Networking can be complex, stressful, and overwhelming. You can create a system that tracks who you speak to while researching every investor you hope to work with. Implementing many of these tips can help secure funding more efficiently and quickly. You can develop strong relationships with investors and professionals in your industry even if they don't invest. They can provide resources and help you extend your network further, helping keep your startup growing and ensuring its success.
Finding investors for your startup can be time-consuming and stressful. When you need the capital to get your startup off the ground, Angel Match can match you with over 125,000 angel investors and venture capitalists in one place. Learn more about how Angel Match works here.
Frequently Asked Questions
Where do you network with investors?Start with warm introductions from founders in your industry who have recently raised, since a referral from a portfolio founder carries more weight than any cold email. Beyond that, angel groups, demo days, industry conferences, and accelerator networks are where active investors spend their time. Investor databases help you identify who to look for before you ever show up.
What is the 10% investor rule?The 10% rule is a rough guideline suggesting an investor shouldn't put more than 10% of their portfolio into any single startup, given how risky early-stage investing is. It's worth knowing because it helps explain why an angel might love your company and still write a smaller check than you were hoping for.
What are red flags for angel investors?The most common ones are an unclear path to revenue, a founding team without complementary skills, unrealistic projections, an unwillingness to discuss the competition, and a cap table that's already crowded. Desperation is another one. That's one more reason to start networking six months out rather than six weeks.
How long does it take to raise a round?Three to six months from the first conversation to money in the bank is typical, and that assumes things go well. Ultimately, this is exactly why the six-month mark is the right time to start, rather than the point at which you begin to panic.
