How to Email Early Stage Investors
themacro.com
themacro.com
I fully agree with this advice -- especially the part about weak warm intros being far inferior to good cold emails. I'd much rather see a good cold email than an intro through a mutual connection that barely knows me and the other party.
One additional piece of advice that I'd add: make your emails personalized. People would be surprised (or maybe not) at how many cold emails I get that start with sentences like "Dear Sir or Madam, let me tell you about my company [which is in a space that you haven't shown any interest in]..."
Adding in one or two sentences about why you emailed me specifically instead of the 500 other early-stage investors is very helpful. I'm not fishing for compliments, but instead some insight about whether I'm a good fit for some particular reason, or if you're just copy-and-pasting the same email template 500 times.
What is decision your decision process whether to answer or not? Do you answer honestly when opportunity is just too small?
The litmus test I currently use is that if it seems like someone put more than 5 minutes of effort into an email, then I will reply. Sometimes emails fall through the cracks because I get swamped with work, but I'd say I reply to ~0% of "template" emails and ~75% of emails where the sender spent at least a few minutes thinking about the content and personalizing it.
Replies vary from "let's meet up" to "this doesn't fit my fund's focus areas" to "I'm not sure if the current version of the company is big enough for a VC business." I try to be honest if I have something constructive to say.
PSA for startup founders reading: this is the type of investor you want. Seek out investors willing to do the work.
So many VCs will publicly gripe about inbound messages, unsolicited pitches, etc. I have heard many VCs explicitly say they will not meet with someone who isn't warm intro'd.
They will beg you to follow them on Snapchat or Quora to create brand for deal flow one minute then bemoan the people who want to actually have a conversation.
Leo's POV is refreshing.
Job interviews, consulting cold emails, VC, someone who has the keys to your destiny and does not know it yet.
The most important things are, in my mind:
1. If possible, make the email actionable for the other party.
2. Don't waste the other party's time.
3. The more you write, the more opportunity you can shoot yourself in the foot. Remove sentences you don't need.
This has been my ticket to opening new doors so many times. Make it easy for people to help you.
Short, actionable, respectful emails with precisely the context needed (and nothing more) is what you need. I have received personal replies from CEOs of major publicly traded companies, with some Google-fu and a quick email.
Twitter? Facebook? Find a Mutual Friend to introduce you?
I completely agree with the parent's notes - keep it quick and clear. The sooner I can find out whether I want to help you or work with you or whatever, the better.
Don't waste two days writing a 2000 word essay if there's a significant chance it will simply be ignored. Establish the relationship first. Heck, I'd have a hard time getting my wife to read a 2000 word essay, no matter how important I thought it was personally.
That goes contrary to a lot of advice other VCs say, which is that getting introduced to a VC is the most common way to get funded. Supposedly most cold emails don't turn into VC funding. Is this no longer the case?
But realistically, there are very few situations where a cold email is better or even as good as a warm email.
A corollary is: if you're not resourceful enough to get a few warm intros, you are going to struggle mightily to found a company.
Once I asked the founder for an introduction to a VC, and the founder turned me over to his also famous CIO. We chatted about old times and my startup.
He gave me a warm introduction to a Silicon Valley VC.
Did it help? Nope. Did the VC seem to care about the introduction? Nope.
So, for a VC, what might be the role of a warm introduction? Sure: Keep down the e-mail traffic.
Next, given a warm introduction, what does an information technology VC really want to hear? Sure, an easy way to make a lot of money quickly, i.e., an information technology company with some good barriers to entry in a huge market with significant traction growing very rapidly and with founders desperate for some cash and ready to sign an onerous term sheet?
I never imposed on that very busy founder or his CIO again.
Yes, some VCs regard a contact without a warm introduction as something contemptible from "over the transom". Well, sounds like the VC is so rich they don't want any more money, is having trouble handling their e-mail, or would be a total pain to have on a BoD.
And, just what is the VC going to bring except fungible cash? Do they know how to manage high end sites of Windows Server and SQL Server, grow a large server farm, manage software development with 100 developers, protect against nuisance law suits, do well with publicity, etc.? What do they really know?
People need to get over the idea that they're building the next big thing.. Because they're not. Turn out profitable business and then if the growth is there push on till the day. Otherwise enjoy what you have or sell it and try again.
E.g., suppose a Web site starts to take off, that is, has number of users per day increasing rapidly. Then, a crucial number in the growth is how soon can one server computer generate enough revenue to pay for a second server computer? That is, we're talking about a start on exponential growth.
Well, long the M. Meeker KPCB reports said that can get paid about $2 per 1000 ads displayed. Okay, maybe now that's down to $1.
Okay, suppose send just one ad per Web page. Get, say, a server with an 8 core AMD processor at 4.0 GHz for $1000 and send on average 24 x 7 just one Web page per second. Then the monthly revenue would be
1 * 3600 * 24 * 30 / 1000 = 2,592
So, in two weeks, get another server. So, we have essentially exponential growth with a doubling time of a little less than two weeks.
So, we have, in the history of (legal) business, about the fastest growth, the best business opportunity, of all time.
But we were talking 8 cores, right? At 4.0 GHz, right? If the Web pages are relatively simple, then we're talking being able to send maybe 8 Web pages a second. And we may have more than one ad per page. Okay, assume as above but 8 pages a second with 4 ads per page and get
1 * 8 * 4 * 3600 * 24 * 30 / 1000
= 82,944
So, we're talking ballpark $10 million a year in pre-tax earnings. At a P/E of 40, we're talking a company worth $400 million, from a spare bedroom.
Is the Internet a great opportunity or what?
Sure, the issue is getting the users.
But with the users, there's only a small window of time when even a dirt poor founding entrepreneur would take equity funding. And without the users, still there would be not equity funding.
Net, it looks like equity funding and Web sites mix like oil and water. If the site grows, if it doesn't, in either case, there's little or no role for equity funding.
Of course, if have just a Web site, may have only a lifestyle business. Okay. Not so bad.
What about "focus"? User's focus when the look at the screen; my focus when I have to work on all the issues in the startup and, then, in addition the ads and, thus, lose my focus; something else?
For user experience, with my Web pages, the ads are fairly easy to ignore. The pages are dirt simple with essentially no JavaScript -- so that pages don't jump around. And all the layout is just via tables so that I know to the last pixel where everything is.
The content the user wants is on the left, and some ads 300 x 250 pixels are on the right. Simple.
So, I'm guessing that the ads will not be very distracting, e.g., won't hurt the ability of the users to focus on the content, i.e., won't yield a poor user experience.
Fine, good enough, but I was on a clock and I knew who I was and I knew who they were and they could have been a great part.
About the time I am signing the paperwork (2.5 weeks later?), I get a call from one of their partners: they heard about it and want in.
No can do. Unfortunate, because I still think two of their partners could/would add value.
But I always wondered: why do VCs make founders jump through hoops that don't matter? Are they to prove the founder can sell? I remain baffled.
Depending on the celebrity of the VC, I can imagine a truly massive deluge of cold emails mostly from supremely unqualified companies.
I can understand their desire to be insulated from that.
The respondents to a well-constructed cold email are also likely to self-select!
Don't insist on a phone call or in-person meeting as the next step. If you can't explain it with email, video, etc. to an investor, you'll have a hard time explaining it to customers.
Use bios, Angellist, Crunchbase, etc. to profile investor prospects. Don't email a tech investor a movie pitch, unless you have a very unique connection to that investor.
Don't insist on an NDA (yes, it still happens)
"This is the only guy with money I know of" is not really a successful starting point to write someone.
Give the recipient enough information in their [iOS alert | Gmail excerpt] to read it when they're in the right frame of mind to think it over.
Professional email is not flirting. Guys flirt by first trying to get your attention and interest, then follow up with an invitation. I assume this gives him an opportunity to bail if he's not getting a welcome vibe, but that doesn't apply here.
See how much information you can pack into the first few words, so they can open it when they're ready. Follow that with the context and data they need to keep reading when they're ready to consider it. End with your own introduction, because you're the least interesting part of your letter (except insofar as you're a part of the venture).
"Hi $name, interested in grabbing coffee? Bla bla bla I met you bla bla, bla bla talk about bla bla."
"Hi $name, interested in grabbing coffee?" buries the "ask" until during the coffee chat.
It can be tough to do, but I think a lot of very busy people would actually appreciate you just coming out and asking for what you want, even in the first sentence.
Makes sense to me.
Really? Who the fuck cares? If I reach out on twitter nobody bats an eye - but use zachaysan@gmail.com and everyone loses their minds. I used to use my @company email for my startup that was acquired. Now I can't find any email exchanges I know I remember having. I'll use zach@venn.lc for stuffy clients, but I thought YC partners were kinda above this kind of outdated thinking.
Like Michael, I find it convenient, when receiving a lot of email from people I don't know well, to have the domain name of their company right in their email address. For example, if I later remember something I want to tell them or someone to connect them to, having their email address autocomplete is nice.
It makes it easier for them to immediately look up your company just from scanning their inbox. If they later come across your company separately, it makes it easier to find your message and to follow up on the email thread (they probably don't remember your name).
During the early stages of the company email does not get my attention, despite the fact that I know how to set it all up and configure it.
To me this is wise use of time. It would be a waste of time to get properly configured email addresses when the real priority is to get code out there.
Look for people/funds who just raised their first fund. They are hustling, likely not drowning in leads like Michael Siebel is, and willing to do just about anything to make their LPs happy including spending countless hours evaluating investment opportunities from complete strangers.
- it forces them to stop what they're doing
- it puts them on the spot forcing some kind of response
Fine, I guess. Do I care? I've got a company to build.
Or is your point that I might hurt somebody's feelings?
This means you should be communicating on their schedule, not yours. Email is async and hands down beats phone calls (which are synchronous).
Also, a lot of people really just hate phone calls. I won't even talk to recruiters on the phone—if they try to call me, I tell them to send me an email.
The other reality is that majority of startups will fail to raise money. So unless you're truly hot s*, raise from anyone including so-called "dumb money" as long as they dont add negative value by pestering you or doing something similar.
Startups die cuz they can't raise or run out of money. Usually a symptom of something else, but don't die cuz you only chased smart money.
Summary:
- Keep it under 250 words.
- Ask only one question, directly before your signature.
- Ask a single yes/no question.
- Extra Credit: Show you did your research
- If you really want a reply: follow up in a useful way.
NOT: "Did you get my email?"It would be interesting to mine emails from well-known investors and see what the data shows for first emails from individuals who were ultimately funded.
I never had any luck emailing professors whose lectures are on youtube for book recommendations or researchers in a field where I'm looking for something similar to what they study.
I have thought of early state funding as more "who you know," and it's good know I can email people!