Don’t Ask for Introductions
By: O'Reilly Media
Tags: Fundraising, Networking

Don’t Ask for Introductions

Editor’s Note: Fundraising is daunting — terrifying, even. And like many hard-won accomplishments, fundraising requires strong networking skills. But there are right and wrong ways to secure introductions. In this article, Dan Shapiro shares some best practices for networking effectively, targeting new potential investors that can make a meaningful impact on your fundraising goals.

Raising money is hard. Regardless of whether you’re targeting angels or VCs, though, there’s no way to screw it up faster than going around asking, “Hey, could you introduce me to some investors?” It’s sort of like going to a party and asking someone to introduce you to a person you could date.

Reason 1: Not Every Investor Is the Right Investor for You

Asking for introductions to “investors” marks you as someone who doesn’t really know what he’s doing. An investor/company match is very specific, and if you want to find your fit, you’re going to have to figure out what you’re looking for.

Most investors specialize in certain fields. Some will invest in early-stage companies, some later. Some will invest in entrepreneurs they’ve just met; some will only invest in people they’ve known for years. Some require a track record and gray hair; some like betting on smart people straight out of college. Some invest big; some small. Many average one investment per year; some do hundreds.

Furthermore, investor styles differ. Some give you tons of room to maneuver; some like to work closely with you. Some offer constant help and advice; others are just about the cash. Some will want regular updates; others don’t like to be bothered.

Before you start looking for investors, figure out what kind of investors you want, and what kind of investors will want you.

Reason 2: It’s Lazy and Rude

Let’s say you have a contact — someone you know reasonably well — who is plugged into the investor community. If you want that person to introduce you to investors, one of you has to figure out which investors are a good fit for your company. That means considering every investor your contact knows and deciding whether they’re a good fit for your startup. The right person to do that (or at least take a first pass at it) is you, not your contact, because you know your company best, and only you know who you’ve already talked to. You do this by researching your contact on LinkedIn to figure out who she knows, then researching those investors to see who’s a good fit. Check investors’ websites, their portfolios, their blogs — get a sense of what they look for, and cross them off the list if they already have competing investments. Then go to your contact and ask for introductions to the specific people you’ve identified, and explain why you chose them.

Sound like a lot of work? It is. That’s why it’s rude to ask your contact to do it for you.

Reason 3: They’ll Give You a Crappy Introduction

If the best thing your contacts can say about your company is that it “sounds interesting,” the intro isn’t going to go anywhere. Your introducers have to be ridiculously excited about what you’re doing. Even more importantly, they need to be able to deliver a summary of your company in one or two sentences. So give them the pitch and ensure they love it.

Note that this implies that you can summarize your own company in one or two sentences. This deserves a chapter of its own. Actually, it deserves a book of its own, and that book is Chip and Dan Heath’s Made to Stick (Arrow, 2008). If you’re stuck, go read it. But I digress.

A great investor intro is about conveying enthusiasm. So you need to sell your contacts on your company, then give them simple but powerful language to sell the investors they’re introducing you to. (And if you actually want introductions that work… get them from people who are already committed to your project. An introduction from an existing investor is ten times more likely to work than an introduction from someone who isn’t involved.)

The Right Way

Want an effective introduction that’s not going to annoy your contact and might actually work? Here are the steps to follow:

Do your homework. Before you meet your contacts, have an explicit list of one to four people you would like an intro to. And this is definitely about people, not firms — it’s better to ask for an intro to Bob Smith than it is to ask for Acme Investors. Pitch your contacts first. Treat them like investors, even if they’re not. Good first-pitch rules apply: don’t teach them; tease them. Show them just enough to get them to want more. Be sure to hammer your one- or two-line summary a few times so they know it. Then ask. Say, “If you wouldn’t mind, I’d really appreciate introductions to A, B, and C. Can I shoot you an email with a one-paragraph summary of the business that you can forward along?” The reach. Now is when you say, “And are there any other investors you can think of that I should be talking to?” You’ve done your homework, they know about your business; it’s OK to ask them to ponder a bit to see if you missed anyone. And it’s easy for them to say, “No, your list is great” — you’re not obligating them to come up with anyone else. Follow through. Immediately after you step out of the meeting, send separate emails — one for each invitation request — that say something like:

Thanks for taking the time to talk today! Your perspective on the business was really helpful. I appreciate you offering to connect us with <investor> — feel free to forward this email to her. I’m including a brief description of us below.

brief description of business

Again, do one per investor, so they can easily forward each one to the right person, hopefully along with a little note that says you’re not a bozo.

I Know This Makes You Sad

Look, I’ve been there. Fundraising is daunting. Actually, terrifying. You want to be able to just get it done, so you imagine that it’s possible to just ask around, meet some nice people, wow them with your charm/business plan/demo, and get on with building your company. And sometimes it is.

But usually it’s not. And the teams that invest the most effort in fundraising seem to have the best results. (Well, the teams with huge traction or great résumés have the best results, but if you’re killing it on those fronts, you’re already cashing investor checks.) If you’re a new team with a demo and a dream, you’ve got a lot of work cut out for you.

So don’t shy away from it. Learn your network’s network, ask for smart and specific intros, and you’ll meet your dream investor soon enough.