Wednesday, May 7, 2014

How to get introduced to other investors

One of the most common questions I get is, "will you introduce me to other investors?"

This a tricky question for an angel like me to answer.  Unless I am committed as a current investor in the startup, if I intro the startup to other investors, then it may actually hurt them.  This is because the other investors will inevitably call me and ask if I'm investing.  Unless I say "yes" after having performed extensive due-diligence, it can result in the other investor getting scared to pull the trigger.  This wastes both the startup's time in useless meetings, and the other investor's time.

This shouldn't be interpreted as me not believing in the CEO personally, or in any way reflects my belief in their startup.  I want very much to see all entrepreneurs to succeed.  This is just a dilemma that gets created as a result of me not being an investor.  It's one of the tricky things that investors have to deal with -- its a weird tightrope we need to walk sometimes.

How to meet investors

As an entrepreneur, here are some strategies for workarounds for this:

-Try to plan your fundraising ahead-of-time.  When you're not yet fundraising, you can ask for intros related to advice rather than investment.  Investors generally will take these meetings.  But you should only do this when you genuinely don't need money since investors will smell it and you'll come across as desperate otherwise.

-You could try to determine which investors might be good to talk to who are a match for your stage / sector focus, and get introduced through other sources besides investors (i.e. entrepreneurs).  The reason this is useful is entrepreneurs don't have signal risk because they aren't investors, so if an entrepreneur introduces you to an investor, it will not hurt you, and can only help you.

-Visit AngelList and look at the list of VCs/angels in your sector focus (you can search and filter that way).  Then make sure your LinkedIn is up-to-date (import Gmail contacts if needed) and look for 2nd degree LinkedIn connections with investors who cover your sector focus, and ask someone (who is not an investor) for a warm intro that specific person.

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