Tactics to Use When Finding a Lead Investor Becomes Frustrating
If you are actively pitching your company, how many times have you spoken to a potential investor and heard:
Come back to us when you have a lead investor.
Isn’t that the most frustrating sentence in the world as a founder? This is one of the parts of fundraising that can be defeating for so many founders.
Where do you take the conversation after someone has told you to go find a lead?
I know in your head you are screaming expletives, but take a breath. And ask these questions:
- Who do you like to see as a lead?
- Whose due diligence do you trust?
- Do you co-invest?
- And finally, ask for an introduction.
If who you are talking to is hesitant to give this information up or to make an introduction, that is most likely a sign that they aren’t truly interested. This can feel like a bummer, but at least now you know so that you don’t waste much of your time thinking they are a yes. If someone really wants to invest in your company, they will be very engaged and want to make introductions.
You can find lead investors - it just takes some time doing homework. Look at the rounds the groups or individuals have invested in. Who was the lead? What round did they lead that matches the type of stage you are currently in (pre-seed, seed, etc.)? Now you have started a list of potential groups that lead.
These are the people you want to talk to first. I know this might sound like a no-brainer, but a lot of entrepreneurs spend time talking to investors that aren’t going to lead, which is a waste of time until you have a lead investor.
Stop talking to investors.
Before you freak out, I don’t mean everyone - just the investors who aren’t going to lead your round. Wait and engage with co-investors when you have a term sheet, a lead investor, and a data room.
If you engage with investors that aren’t going to invest until you have a lead, you are then going to have to spend time keeping them engaged until it’s time for them to fully commit. This is a drain on your energy that could be averted.
You run the risk of a super excited and ready investor going cold because they became interested in another company.
Pro tip on connecting to investors.
I know what you are probably thinking: How are you going to get these lead investors to engage with you? E-mail and LinkedIn messages don’t seem to work and you don’t have anyone that can make a warm introduction.
Here is my pro tip: Reach out to a company in an investor’s portfolio, connect with the founder, chat with them for ten or fifteen minutes, and ask for a warm introduction.
This is great for two reasons:
- Investors won’t ignore an e-mail from one of their founders.
- You get to do some deep due diligence into the investor.
Find out from that founder what their experience has been working with that investor.
Don’t lose hope.
You will find your investors. They are out there. With a little patience and the right research and action-oriented due diligence on your part, you will find them.
Lauren Kane is a Pitch Strategist, Angel Investor, and Founder of VC Worthy Business. She has worked with female entrepreneurs for a decade.
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