(PRWEB) March 26, 2012
Growthink - a leading entrepreneurial consulting firm that has helped thousands of clients develop business plans - has revealed some key professional tips on contacting investors via email. It's one of the most essential first steps for any entrepreneur looking to raise funding from venture capitalists and angel investors, and must be approached strategically. From subject line to content to timing, all elements must be in synch for the best chance of success.
Dave Lavinsky, co-founder of Growthink, said, "You should never send an investor your business plan cold. Rather, you should always start with a "teaser" email - literally, an email that "teases" the investor by giving them a bite-sized amount of compelling information about your company." The goal of the email is to see if the potential investors are interested. If they are, the entrepreneur should follow up with more information (maybe with an Executive Summary and/or full business plan) with the goal of getting a face-to-face meeting with the investor.
There are two reasons why one should never send a business plan in the initial email. First, never "over-shop" the deal. "Over-shopping means letting too many investors know about the company," says Lavinsky. "If too many investors know, the law of numbers states that many investors will pass on investing (remember, most investors passed on the opportunity to invest in Google years ago).
So, if an investor isn't even interested in an entrepreneur's market space or teaser email, they certainly won't invest in the company. And then here's what can happen. As Lavinsky illustrates, "An interested investor asks this investor (the one who isn't interested in that space) if they've heard of the company. That investor says "yes" (since the entrepreneur has unwittingly sent them the plan) and that they weren't interested. And then their disinterest persuades the once interested investor from funding."
The second reason to avoid sending out a business plan in the initial email is for confidentiality reasons. "It's just not wise to have a business plan out there for everyone and anyone to see," says Lavinsky, "Rather, an entrepreneur should wait until the investor shows that they are at least somewhat interested in the venture before sending it."
So what should be included in the teaser email? The teaser email should include 5-6 bullets about the company and should be very short (200 words or less). The goal, once again, is simply to create a general interest in the venture so the investor commits time and energy to learning more about it (by requesting additional documents or setting up a meeting). The email's bullets should describe what space the company is in and credentials that make it uniquely qualified to succeed (e.g., credentials of management team, customers serving already or showing interest, etc.).
So what should the subject line be on teaser emails? Generic subjects like "Unique Investment Opportunity," "Please Invest in our company," and "Great Investment Opportunity" don't catch investors' attention and/or could turn them off. Here are a few subject line "templates" to use:
1. "Re: Your Involvement in XYZ Company"
Where XYZ company is a company that the VC has funded and which is in the venure's general space. An entrepreneur would start the email with something such as "based on your investment in XYZ company, I think you will be interested in what we are doing..."
2. "New in XYZ Space" or "XYZ Space Introduction"
Where XYZ is the "space" that the venture is operating in (e.g., the financial software space). The first line would tie the subject line to what the company is doing.
3. "Referred by XYZ"
Where XYZ is a referral source that knows both the entrepreneur and the investor. This works extremely well, but clearly one must first get the referral.
4. "Comment on Your Post About XYZ"
Where XYZ is a post that the investor recently wrote on their blog about a subject. In the opening line, the entrepreneur should explain what they agree with in the post and then tie it to their company.
Finally, as Lavinsky explains, per securities laws, emails cannot be sent out to investors with whom the entrepreneur does not have a pre-existing relationship. Lavinsky advises entrepreneurs to first establish relationships with investors before making any kind of investment offerings.
Growthink, Inc. is a leading provider of entrepreneurial consulting services. Growthink has also developed several training products and tools for entrepreneurs, including its best-selling Ultimate Business Plan Template and sample private placement memorandum template. To learn more about Growthink's products and services, call 800-506-5728.