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Why Do Investors Say "No"? by@ikrasnov
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Why Do Investors Say "No"?

by Innokentiy Krasnov January 2nd, 2023
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All startups hunt for capital, and in order to attract it from investors or funds they need, first of all, to contact them. However, when attracting investments, you may encounter difficulties even at the first steps, for example, with a low conversion rate of responses to your requests. In this article, I will share my experience and try to give several answers to the question - how to contact the investors so that they answer?
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All startups hunt for capital, and in order to attract it from investors or funds they need, first of all, to contact them. However, when attracting investments, you may encounter difficulties even at the first steps, for example, with a low conversion rate of responses to your requests. In this article, I will share my experience and try to give several answers to the question - how to contact the investors so that they answer?


First of all, I will single out two main parts, which will sound like this: “to whom you write” and “what do you write.” Mistakes can occur both at the stage of choosing the person to whom you will address the letter, and at the stage of wording your request.

Who are you writing to?

The first question you should ask yourself is: “How interested is the fund in communicating with you?” You must clearly understand whether your company falls under the criteria of the market and the stage which the fund invests in, whether you fall under its investment interests. The second question is: “Is the fund active or not?” Look when the last investment was made, use open sources like Crunchbase.


If you understand that you do not fall within the fund's mandate, then at best they will answer you and share the contacts of friendly organizations that focus on investing into projects such as yours. At worst, they will simply not respond, and you will waste your and other people's time.


Consider the rank of the person you are writing to. Let's say you have a contact on LinkedIn of an intern and a fund partner.


If you write to an intern, they will most likely respond to you and ask for more information. And then, a couple of iterations of Q&A later, it may happen that they stop returning to you, and that’s after they have started a long-term dialogue and have set a few calls for discussion! Why is this happening? Because at the intern level, an employee does not make the decision to invest or not to invest. The intern, communicating with you, simply gains experience in communicating with a startup, conducting internal due diligence.


If you write to a partner or a managing director, then it is highly probable that your message will simply be ignored.


A sweet spot is to write to associates and managers, because they are the ones who are most often responsible for the deal pipeline that is not spontaneous, but systemic. They have more time to look for projects and make calls that will result in investments.


Tip: usually it is more fruitful to write through social networks than by cold mail. If you use an unverified email found in open sources, then there is a chance that it may be incorrect, and no one will see your message. Moreover, cold emails give a lower conversion rate in my experience, yet when writing a message on social networks, consider whether your counterpart’s account is used for work or for leisure.

What are you writing?

●      The rule of good ethics is to say where you got this contact

●      Explain who you are and what your offer is, try to put this information in one paragraph as a kind of an executive summary

●      Clearly, but succinctly describe the information about the project. If you do not know what the pitch should be structured like, then read the column that I wrote earlier LINK

●      End the message with what you offer specifically and what is required of the fund in this case

●      Suggest switching from written communication to calls

Common Mistakes

Recently, I came across a situation where a firm has texted me regarding a potential partnership on behalf of a particular person, but communication was carried out entirely by their assistants, who communicated according to a pre-written script and, when assigning a call, could not clearly explain why it was needed. Here is an example of how not to conduct business communication and I was quick to reject the proposal, as I had a lot of tasks that I understood the importance of, unlike the described case. Other common mistakes are the following:


●      Do not write to funds and investors whose investment focus you do not fit in

●      Try to write using publicly available proven sources

●      Write clearly what you need from the person

●      Do not mass-mail 20-30 funds that you may not ignore later yourself

●      Do not be too persistent with the next steps, if you have no prior agreements


And a final tip: do not forget about your network. Most likely the person you need to reach is only a few handshakes away, try to get a warm intro with them by means of your friends, colleagues and the existing warm network.