Finding investors who can potentially provide startup or growth capital is one of the most difficult challenges founders face. It’s rarely as simple as ‘build it and they will come.’ In fact, ask any seasoned founder who has secured startup funding and you’ll often find that he or she had to build a large pipeline of potential investors before securing that first round of investment funding. The numbers vary but in general, most founders say that they had to build a pipeline of at least 100 potential investors before meeting with any degree of success.
Regardless of the number, finding investors to target is tough. Many experienced entrepreneurs will agree that finding investors has a lot to do with networking and being connected to the right people. Fortunately, there is a global platform solely dedicated to building professional connections of every imaginable type. That platform is LinkedIn.
LinkedIn is the world’s largest online network for connecting professionals to one another. With a combination of skill and diligence, LinkedIn can serve as a powerful tool for finding investors to target for pitching. In fact, when it comes to finding investors, LinkedIn is an often-overlooked resource. The process of finding investors, conducting research and prioritizing them is often referred to as building an investor pipeline. The purpose of building an investor pipeline is to create a pool of targets who can either provide investment for your startup or at the very least, introduce you to other prospects.
Here are four tips for finding investors and building an investor pipeline using LinkedIn.
1) Create a Strong LinkedIn Profile: The first step in finding investors on LinkedIn is building a top-notch profile. Your public LinkedIn profile is the equivalent of business card, resume or pitch deck that other people will view. If you wish to attract investors to visit your profile, it is crucial to start by developing a strong profile page, explaining what your startup venture offers. Many times. investors themselves use LinkedIn to search for startup ventures in which to invest. It’s important that your LinkedIn profile be professional, providing key information of importance to potential investors. Key points to be certain to address include: a professional headshot; a short summary describing what your startup does and the key problem it addresses; information about you and why you have the skills necessary to make your startup a success; and information about how to contact you.
2) Build a Network of Contacts: With over 400 million of highly educated professionals, LinkedIn is the top business social network in the world. Finding potential investors is as easy as hitting the “Search” button and typing in “Investors” and other similar search terms. The problem here is if these investors look at your profile and see that you do not have a good number of friends and affiliated networks, they will most likely ignore your request to connect with them. Before making connections with founders, investors need to see a person’s legitimacy. They need to see that you are an entrepreneur affiliated with other entrepreneurs. They will research about you by visiting your timeline and viewing all 3 levels of your connections. If you are fortunate enough to have common connections with a potential investor you want to target, he or she is more likely to be receptive to your connection request. If you don’t have any connections in common with a potential target, then you’ll need to come up with a compelling reason for them to accept your connection request. There are many excellent resources that can teach you best practices for building a strong network on LinkedIn. Social Media Examiner has some excellent articles on the subject.
3) Do your Due Diligence and Research: Like any social media website, LinkedIn also has its fair share of scammers and hackers. It also has a good number of illegitimate business folk that lack the proper credentials. For this reason, it is highly imperative that you do your due diligence and research whomever potential investors you are considering making a pitch to. If you have common connections with that particular individual or business group, ask your connections about them. Find out who they are, how they work, and most importantly, if they are accredited. Before you start pitching a potential investor, you need to fully understand their investment priorities and past investment history.
4) Join LinkedIn Groups: The “Groups” feature of LinkedIn can be an excellent way to connect with potential investors for your startup. For founders interested in finding investors, public LinkedIn groups such as Angel Investors is a good starting point. But don’t just focus on groups targeting investors, research your prospects and join public industry-specific groups to which they belong.
As you go about the process of finding investors on LinkedIn, here are some important points to remember:
- Be strategic: Don’t randomly make connections but rather, be strategic with your requests. Potential investors typically get a lot of new connection requests so provide a valid reason for them to connect with you. Remember too that LinkedIn will freeze your ability to add new connection if you go about it randomly.
- Build credibility with your posts: When you join groups, don’t make the mistake of immediately promoting your startup. If you do, you’ll be written off as a spammer or at the very least, you’ll come across as uninformed. Instead, take time to read what others are posting and provide meaningful responses. Invest time in building your credibility.
- Be respectful: You will never get anyone to take you seriously if you are not respectful of the persons with whom you are trying to connect. Your efforts at finding investors will be completely derailed if you immediately start blasting out pitches to your new connections. Start by sending them a polite ‘thank you for the connection’ note and build a relationship. Being respectful also means that you should ask before sending a pitch deck or other information about your startup.
- Be patient: Finding investors and building an investor pipeline takes time. Don’t rush it. Rather, take time to build quality relationships. While this can be a time-consuming process, the short- and long-term benefits are well worth the effort.
Finding investors is not an easy process but following the steps above will put you on a path towards building a solid pipeline of potential investors for your startup.