9 min read
This story originally appeared on The Successful Founder
It may seem incredible that an unsolicited email from a startup founder to an investor they have never met can lead to a response, let alone a multimillion-dollar deal, but it does. I know because that's how we've made investments, including one of the most valuable companies in the Storm portfolio that was emailed to us. In this post, I'll explain the properties that can make cold email successful – at least for me.
Align your email accordingly
If you are thinking of sending a bulk email to every investor you can find an address for, you are wasting your own time, let alone that of potential investors. If I see a message that I know has been sent or sent to 3000 other investors, I will likely delete it without reading it, as I imagine it would be.
We all get a lot of email and pull from my own inbox. I get a shocking number of emails from entrepreneurs who for some reason shouldn't have contacted me. For starters, it's no secret that I focus on B2B SaaS. If you work in a life science or consumer goods business I don't know how to build that business and I am definitely not the right partner. Nor is this advice limited to any specific sector, it also applies to the stage of your company. If you're just a team with a prototype or an idea and no sales, you need a seed capital investor to get involved before the sales. Again, it's no secret that the startup phase isn't my game: Storm generally looks for companies that have early signs that the product market in the form of revenue will fit. There are many seed companies who want to be the first check into a company. If you are not at this stage yet, why should you target them with a note? No matter how great your email prose is, you are not going to convince me to change my investment strategy. It's just not a good use of time.
Personalize your message
After you've trimmed your investor list of all venture investors, you'll have more time to personalize your message. Don't try to make it literally personal. you don't know me and i don't know you However, you can customize your message so I know you put a little work into getting me to read. The best homework you can do for this is seeing what your target investor has already left behind. Look for companies in their portfolio that are relevant to your business or other CEOs they have invested in. In Storm's case, you may have read something someone here at the company posted online or watched one of my videos. Maybe something got a response you want to mention or generated some questions you want to ask. Adding such touches affects an investor's responsiveness. To be clear, I'm not talking about flattery or fueling an investor's ego, but interest that shows that you've only done some homework.
Related: Simple Tips for Building a Powerful Email List
We're buried in a constant flood of emails and we're constantly developing filters. An email showing that a business owner invested a little time is a positive indicator of fit. It is only possible if you aim.
For example, one of my favorite SaaS metrics is sales efficiency. I've made videos and posted blog posts about it for everyone to see. If your email tells me you've seen one of my videos and your sales efficiency is great, I will give you a response – and if you don't, it means I dropped the ball.
Present your best metrics
Except in early cases where a product or team has not yet come together, every company has numbers. This is the universal business language. Find the ones that interest an investor, put them in a format and context that any investor can understand, and make sure they get through in the email. Some typical examples:
● Churn rate
● ARR growth
● Number of customers
● gross margin
● Sales efficiency
Use bullet points to make it easy to digest. Ultimately, every investor looks for a specific profile when it comes to business metrics. Your job as the founder is to achieve that profile and you either have it or you don't. If you include the relevant metrics in your email in a clear format, the recipient knows immediately if there is a match. Perhaps you are afraid that your numbers are not good enough and that you just want the meeting. I get it. The problem is, even if you get a meeting, you don't get an investment. Just get the metrics out and qualify your time.
Less is more
I've lost the number of entrepreneurs who have told me they will change the world or disrupt an industry. I think it's great that there are people who are ready to face great challenges, but it's not enough for me to be a disruptor and change the world to take part in a meeting. I need to see why your company is a good fit with Storm Ventures. You should be able to explain it in 100 words or less. This word limit helps you focus on the relevant metrics and less on changing the world or disrupting an industry. Save that for your PR strategy.
If you're worried about sending detailed, sensitive information, the good news is you don't have to send it. There is little point in sending a discounted cash flow analysis or whatever in a cold email as the goal of the message is to get to the first meeting and not give any potential investor all of your data.
Related: How Are You Improving Email Marketing? Start by improving your list.
However, if you really think you need to send more details, put something simple and tempting together and add it as a PDF. Personally, I'm not a fan of Docsend – it's a hassle and feels intrusive – but that's just me. Maybe others will agree. It also doesn't work well on a phone where it is probably consuming 50% of my email.
Send the email yourself
When your administrator writes the email, a message will be sent: "I didn't care enough to send it myself." That means I don't have to read it. Investors only have so many hours a day, and little things like these make a difference when they get to our inboxes. If you're so busy that your admin has to write the email, at least make sure they log into your account and send from there. It's an easy hack. This is also not a good way to introduce yourself for startups, bankers, and brokers looking to raise money. Maybe they can help you in the background, but that's your business, and lifting the next round is crucial: make it your priority.
Who should target the company?
The advice you may have received is: "Only approach senior partners within a company." Ignore it. This may vary from company to company, of course, but to me an opportunity that comes from elsewhere in Storm has as much value as one that crosses my desk in person. Find your way into a company that you can. We have a team at Storm because we all work together, and using other people in the company can sometimes be an even more effective way to get attention. With this in mind: Avoid sending notes to everyone in the company. It's aggravating because you're effectively asking everyone to read the same note, think it through, and respond. We don't talk about opportunities together as a team until they are fully qualified and someone has already met the founder.
Every venture investor I know makes it pretty easy to find their email address, including me. My job is to meet the founders who I don't know yet. For me, Linkedin is awesome as a tool, but terrible when it comes to messaging. It's not my workflow. I don't want any other inbox to be serviced, and I am less likely to get a response there (see the targeting and personalization sections above again for a refresher).
It is difficult to estimate how long to wait before tracking as it depends on how a particular investor is working or where they are in that week. My rule of thumb is to wait a week. If you haven't heard about it, send another message – but not the exact same message you originally sent. Reply to your sent e-mail with a few polite lines. If another week goes by and there is no response, then you can assume that you were not thought fit. And don't let the fact that you didn't get a response get you down: everyone is trying to do their job and it's not personal. Sure, it is possible that you were too busy and missed it, but that's why you're targeting more than one investor.
Related topics: Stop sending to unconfirmed email addresses. This tool is a quick way to clean up your email list.
Cold parking spaces work. My job as an investor is to deliver returns on my LPs. The only way to do this is by making the best possible investments in entrepreneurs and companies with the best potential. I am sure that there are amazing entrepreneurs that I have not yet connected with, founders of companies that would be a good fit for our company. The global Covid-19 pandemic makes cold email even more important: I want to meet entrepreneurs in every country, and as far as I can tell, email is the best way to do it in the future. Do you live in rural Georgia? No problem. Remember that the goal of the first interaction is not to close a deal, but rather the next meeting. Build interest in what you are doing and go step by step from there.
Please see this video for more information