MASTERING THE ART OF INVESTOR RELATIONS

When it comes to fundraising, many founders understand the basics. They can speak to their numbers, craft a path to profitability, and convey clear confidence in their vision. They can find resources galore on building the most captivating pitch deck and recite past Shark Tank negotiations by heart. But for many founders, the mystery of fundraising lies beyond the transaction itself. For many founders, the greatest challenge is the one they least expected: relationship building.

We spoke to founders of successful raises – Cason Crane of Explorer Cold Brew, Paul Voge of Aura Bora, and Griffin Spolansky of Mezcla – as well as Mike Gelb, host of The Consumer VC Podcast, and other experts from The Startup CPG Podcast, on how to best approach building and maintaining relationships with potential investors.

INITIAL OUTREACH

Be genuinely personable

Founders often hear that it is valuable to build a network of potential investors before you actually have an ask. But what does that mean in practice?

Many consumer investors have become thought leaders in the space and are sharing their perspectives through their content. Gelb suggests that you get to know them as “experts” first before “investors.” “Listen to podcasts they were guests on, follow them on LinkedIn and Twitter and read their posts, and demonstrate that you value their thought leadership,” he says. For instance, he suggests that you engage with their content on its native platform or send them an email with commentary or questions about something they’ve shared. “Do your research on the investor as a human being. Learn how they think about the future of consumer, and nurture a relationship that isn’t attached to an ask.”

“If you ask for money, you get advice. If you ask for advice, you might get money.”

Get specific with connecting

“A lot of people ask their connections, ‘can you introduce me to other investors?’ And usually the response is ‘let me give it some thought’ and you never hear from them again,” says Paul Voge. He suggests getting extra specific with asks to avoid this block. For instance, try saying something like: “can you introduce me to someone named Samantha in Cincinnati?” This specific ask now makes them think “Do I know someone named Samantha in Cincinnati?”

“For us, this looked like saying, ‘hey, I totally understand if we aren’t the right fit. Do you know anyone with a beverage background on the west coast who I could talk to?’” recalls Voge. “All of the sudden, someone came to mind and an intro was made.”

Always offer a “forwardable email.”

Apart from getting specific, the best way to secure an intro is by taking the burden off of the middleman. Instead of asking someone to draft an intro on your behalf, reframe the question to allow for double opt-in. Gelb suggests that you prepare a “forwardable email” that your current contact can easily pass along to the potential connection – with zero effort or stake in the game. All they have to do is forward your pre-written email to their connection with the subject line “Interested?”

This also gives you control over how your company is framed and provides an opportunity to make the email personal; you can actually speak directly to the final recipient in the email before you are formally connected to them.

Make it ridiculously easy

Investors are taking meetings all the time. One of the ways you can differentiate yourself from the crowd is by making it ridiculously easy to connect with you. Be open to meeting an investor wherever and however they want. If you know they go on daily walks, offer to walk with them. Go beyond the typical “grab a coffee” to fit more seamlessly into their existing routine.

Be persistent

Founders often struggle to tow the line between “persistent” and “annoying,” and err on the side of silence. But Gelb suggests an in-between – aiming for persistence without a direct ask. In the same way that you should initially nurture your relationship with investors sans ask, he suggests regularly following up, with genuine interest. “Follow up with a reason – an update on your brand, commentary on an article the investor was featured in, etc. – make it conversational, and you will set yourself apart.” A common fallacy is thinking that the key to setting yourself apart is by playing it cool; in reality, most founders are falling off after initial outreach. The key to setting yourself apart is by remaining visible and persistent.

Pitching Process

Upgrade your tech stack

If you can’t set up time with an investor, or have to virtually share your deck, consider including a Loom video. Loom is a great tool that allows you to add person- ality to an otherwise stagnant deck, and showcase the human behind the brand.

“Using Loom, you can walk someone through your deck in 5 minutes,” says Marcia Dawood, Chair of the Board of the Angel Capital Association, on the Startup CPG Podcast. “You're never going to give them all the information in five minutes – and that's not the point. The point is to give people enough information to want to sit down and learn more.”

Docsend is a well-loved tool by fundraisers. All you have to do is upload your pitch deck to Docsend, and it creates a unique, secure link for sharing. Docsend tracks every single person who opens your pitch deck and captures their email. And beyond capturing this data, you can use this email list to program automated outreach.

Gelb shared that he once saw a brand set up their Docsend to automatically send an email to whomever opened their deck. This email shared a quick highlight of the main exciting points in the deck in 4-5 bullets, and had a link to the found- er’s Calendly for “any further questions.” At the end of the email, the founder encouraged the recipient to forward the deck to anyone they thought may be interested.

This process took all of the effort off the recipient’s plate – and turned a pitch deck into a word-of-mouth machine.

Don’t bury the lead

“Saving the best for last” should not apply when it comes to pitching. Investors may only be dedicating a few minutes of time to your pitch, and are looking to be hooked immediately. “Start with the hottest things happening, and then get to the details,” says Dawood.

Iterate

“Take notes of every question that investors are asking, and iterate your deck to answer those questions for the next pitch,” says Gelb. “Your deck should be getting better and better throughout the process – which is also why I suggest that you meet with the investors that you’re most excited about towards the end of your process. Both your deck and presentation will get more polished in time, and you’ll be answering questions before they even come up.”

Asking for feedback

“You’ll often hear something like ‘we’re not interested, but we’re rooting for you from the sidelines,’” Gelb recalls. “Ask these investors for feedback. Send them an email after the pitch, and mention that you really value their perspective and appreciate their support. Ask if they have any advice for improving your pitch, and actually take this advice into account.”

Staying In Touch

Be extremely organized

Gelb emphasizes that investor outreach should never feel like “a meeting here and there.” Rather, it should be a strategic process.

“Think through every single system you have in place,” echoes Cason Crane, founder of Explorer Cold Brew. This includes how you’re capturing notes from every meeting and keeping track of every single follow up. “If you’re not personally organized, utilize someone on your team who is,” he suggests. “Guide them to call you after every investor meeting they see on your calendar and ask you for the readout and next steps. Have them then schedule all next steps in your calendar while you’re still on the call.”

Keep a running draft

Every month, start a new email draft to send to potential investors, current investors, and friends of the brand. Throughout the month, add updates to it as they come up, instead of waiting until the end of the month to pull it all together.

Whether you were written about in an article, received an award, or spoke on a panel, make sure you are sharing every single milestone with your investor network. Consistency gives the sense of “buzziness” and makes the recipient feel like they are seeing your brand everywhere.

It’s easy to get strung along by investors, and many brands I spoke to felt frustrated by a lack of closure. As important as it is to stay optimistic throughout the process, it’s equally important not to waste your own time – so it’s worth going into the process with a grain of realism.

“We had close to 100 meetings over the course of a year – VCs, family offices, angels, family and friend investors,” reports Crane. “VCs want constant deal flow, which means that they may take meetings even if they aren’t interested or aren’t actively deploying capital. They have no incentive to give you a hard ‘no.’”

“They will often say things like, ‘it’s just a little early for us right now, but keep us in the loop,’ or ‘when you raise your next round, we want to be part of it,’” he recalls. “Ultimately, the business could be thriving in a year, and they want to leave the door open to come back. Founders are in a disadvantaged position – it’s a climb with no actual summit, because investors aren’t incentivized to share their honest opinions.”

“At first, I thought everyone who took a call with me about investing was interested and excited about the opportunity,” says Griffin Spolansky, co-founder and CEO of Mezcla. “I would talk to the same investors for weeks, and make little traction. Looking back, I would urge my younger self to be upfront with investors on intention. I would ask ‘are you interested in investing now? If not, no worries, I'm happy to have the conversation anyway, but it’s helpful for me to know what to expect.”

Crane reiterates this, suggesting that founders ask for transparency when appropriate. Time is a founder’s greatest asset, and it’s worth knowing when to stop investing time for the false promise of financial investment.

Remain transparent, too

When you’re raising, your business is already capital constrained. On top of this, your own time is split as you attempt to run the business and raise simultaneously. It’s challenging to take on growth projects. Don’t have much to report? “Be upfront,” says Crane. “When you’re lacking additional data or updates, share that your current constraints may be hindering quarter over quarter growth. And the sooner you close the raise, the sooner you can get back to demonstrating growth.”

CLOSING THE DEAL

Remember that this is a two-way street

As Spolansky progressed through three rounds of fundraising for Mezcla, he began to change the way he approached meetings: “I went from being super eager to close a deal in every meeting, to focusing more so on vetting potential investors as partners,” he reflects. “Our numbers are strong and we have a great product. Just as much as we want to raise money, investors want to get into deals that can be lucrative for them.”

He reminds us that the wrong investors on your cap table can cause more harm than good. “Thinking about entering relationships with potential investors as partnerships has been extremely helpful for me in my approach to fundraising.”

Set clear expectations

Fundraising is often compared to dating – which makes your relationship with locked-in investors analogous to marriage. Though the courting period is over, the most critical phase of communication is just beginning.

On the Startup CPG Podcast, Wayne Wu of VMG Partners explains that the most important thing you can do post-investment is establish what a “win” looks like: “Defining success with your investor is really important because it impacts how you think about resources and strategy moving forward.”

Gelb echoes this sentiment: “Know what their expectations are, what their core competencies are, and what they believe your brand could be. If they pitched themselves as a hands-on investor, hold them to it. If they mentioned that they could intro you to XYZ buyers, hold them to it.”

By Jenna Movsowitz