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. There is only a small percentage of startups that are actually able to obtain funding from investors.
The numbers really stress 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 anyway 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. It's managing relationships and extending your network by connecting 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 a 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.
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. Investors are available through several networking platforms and tools. You'll be able to set yourself up for success to be able to ensure you are spending time getting in front of the right people.
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.
– 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 present, you can appeal to their preferences and increase your success in securing funding for your next round.
– 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 projects 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.
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 90,000 angel investors and venture capitalists in one place. Learn more about how Angel Match works here.