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How to Approach Investors for Seed Funding? - Reg CF, Reg A and Reg A+
How to Approach Investors for Seed Funding
The funding done at the early stage of a startup is known as seed funding. It is the ground work you do for your Series-A funding. It allows you to transform your idea into a viable product. There are many key steps involved in the process of raising seed funds. Approaching the investors is obviously the most important one.
Pre-requisites to Approaching Investors
Before you approach investors, it is recommended that you learn about some key aspects of fundraising, e.g. types of funding, startup valuation, market analysis, calculating funding amount, etc. Next, there are two primary pre-requisites to approaching investors:
While this isn’t mandatory, it helps improve your chances of success. If you have some PR, then it is likely that investor you are going to approach already knows about your startup. This increases the likelihood of further discussions and funding. There are many startup media portals that can cover your journey and give your startup a nice boost among readers.
Be sure to draft a quality business plan. It is a document that contains valuable details such as company description, executive summary, service or product line, market analysis, cost structure, funding request, marketing and sales, customer relationships, value proposition, financial projections, and more.
A pitch deck is basically a well-structured visual presentation of your business plan. If you cannot design it yourself, then it is recommended that you hire an expert to do that.
Approaching Investors for the First
Time There are two primary, well-known methods of contacting investors for the first time. These include:
Contacting them on LinkedIn
Make sure to keep your introductory note short and crisp when contacting an investor on LinkedIn. Since LinkedIn allows limited sentences per message when you send a connection request, you must keep it as clear as possible. Don’t ask for money while connecting. Instead, ask the investor for guidance on something that they specialize in.
Contacting them Via Email
Email is another method to approach investors for seed funding. There is one specific rule you should follow when contacting an investor via email. Send a message to a few of them on LinkedIn and wait for about a week. If you don’t get replies, then it means there may be a flaw in your message template. So, try to improve it and then send it to a few investors on LinkedIn. If the reply rate increases, use that template to contact more investors. When you start getting replies from several investors, you can then contact others via email.
No matter what method you use to approach investors for seed funding, be sure to approach each investor differently. Don’t just copy/paste the templates and send them to everyone on your investors seed funding list. Research about the investors and write personalized messages. Every investor should feel that you have taken your time to learn about them and their contribution means something to you.