Using social media to connect with potential investors is a topic that startups searching for funding need to understand very well. Over the last decade, has drastically changed the way we do business in more ways than one. In the past, social media was primarily viewed as a tool for businesses to engage customers and grow their sales. But over time, startups have become increasingly aware of the tremendous value that social media offers founders in launching and scaling their businesses. Using it as a tool to find investors and even build an investor pipeline are just two ways in which founders have begun using social media platforms in recent years.
Founders are not likely to ever be able to avoid the nerve-wracking experience of pitching their startup to a hard-to-meet investor, using social media to connect with potential investors has become a great strategy for building the relationship prior to the pitch. And while initial meetings are almost always face face-to-face, some startups have been successful in gaining investor attention by developing a strong, strategic social media presence.
In fact, statistics show that the majority of investors today social media to scout promising investment prospects, vet potential investments or to get the latest updates on up-and-coming ideas and startups. A 2019 study showed that among investor respondents, 98% use social media to research startups and potential investments. Additionally, 88% said that they regularly make decisions based on information they have learned online.
Key social media platforms that startups use to find investors and build an investor pipeline include:
Among those above, LinkedIn is by far the most popular social media platform investors use, followed by Twitter. In addition, startups also use investor-specific platforms such as Angel.co, Crunchbase and similar.
Now let’s take a look at some best practices for using social media to connect with potential investors.
- Be authentic: In my opinion, this one is the most important aspect of any startup social media strategy. The phrase ‘be authentic’ is most commonly used when discussing individuals or personal relationships. But as investors become increasingly savvy and diligent in their online research, it is equally important that startups be authentic in their social media presence. When referring to people, authenticity refers to presence, living with conviction, confidence and being true to yourself. For startups developing their social media presence in the hopes of building an investor pipeline, being authentic is really no different. And being authentic has to extend across all aspects of your startup, including the founders. Founders cannot separate themselves from their startups–if they are not perceived as being authentic, neither will their startups and investors will most likely flee.
- Be strategic: When you develop your startup social media strategy to find investors (or customers), focus on providing the information they want to know, not on what you have to say. Just like a pitch deck, keep your message brief, to-the-point and compelling. I recommend looking at it from this perspective and answering these key questions: Why this? Why now? Why us? If you can effectively (and quickly) answer these questions in no more than two to three sentences, then you’re off to a good start. It’s important that you share your story but it’s more important that you do so in a strategic, well-crafted manner.
- Generate social proof: Getting social media conversations going about your startup can be a great way to generate buzz, build your online presence and generate social proof. If you are not sure what it is, social proof is one of Robert Cialdini’s six principles of persuasion. Twitter provides an excellent platform for getting people to talk about you and start generating social proof. Employ a simple Twitter strategy that uses a combination of hashtags and links to your startup website to get conversations about your brand flowing. Interact with your followers and friends and encourage them to use your hashtags in their own tweets or to retweet your posts. Social proof can be great for demonstrating traction, proof of concept, and customer engagement. Keep content personal so you build a community around your brand rather than simply collect page followers.
- Make effective use of LinkedIn: LinkedIn can be one of the most effective ways for using social media to connect with potential investors. A quick search of one potential investor can snowball to potential investors who are part of the same network. With a simple click, you have ready access to their business and professional information, giving you a good head start in your research. But whatever you do, do not start harassing potential investors on LinkedIn by sending them unsolicited pitches or poorly-worded messages. Rather, start following them so you receive their updates or even join some of the same groups to which they belong. Even then, don’t start pitching your startup right away but instead, pay attention to what they are saying and engage with them as appropriate. The goal is to start building a relationship and establishing your credibility. To fully maximize the platform, make sure to use the “Advanced Search” feature, which allows you to customize searches according to industry, company, school, groups and causes.
- Follow investors on all social media platforms: This tip is particularly useful if you’re seeking to connect with angel investors as they tend to be more active on social media. Many of them are active on Twitter, joining in on conversations about investing and sharing about the companies they support. Paying attention to what they’re sharing on the social online space can give you a good idea of how they work, the kind of ideas that interest them and the personal approach they take, before you approach them for that initial contact. Comment on their posts when relevant to start building a conversation and relationship.
- Use social media to offer insights and updates about your startup: In conducting due diligence or just hunting for good startup ideas, investors may take to your social media presence across all channels to get an idea of your market reach and the target group interacting with your business. Investors of all types may look up your Twitter and Facebook pages to see how your business aligns with their personal interests. Additionally, you can also use social media to give them a sneak peek at how your business works by sharing behind-the-scenes content or snippets of the day-to-day operations of your startup. This can give them a closer look at your business beyond what’s written on the “About Us” section. Regardless of your approach, be sure to be consistent and post regularly.
As you use the strategies above to build your pipeline of prospective investors, be sure to keep track of your efforts using a spreadsheet or other tracking tool. I recommend ranking the relationships as they evolve, using a scale from 1 to 5 or something to your liking. As the level of engagement increases and the relationship strengthens, you can increase the ranking until you get to the point where you feel it’s appropriate to ask them to review your pitch.
There are no hard and fast rules here other than the following:
- Be professional.
- Be polite.
- Have a purpose for the conversation or message.
- Don’t be verbose or use meaningless words (aka the “word salad”).
- Be concise, choose your words carefully and make each one count.
- Don’t be offended or nasty if they no–things may change in the future and you don’t want to unnecessarily burn a bridge.
The tips above are just some of the ways startups are using social media to connect with potential investors. Interested in learning more about these and other strategies? Contact me today and let’s talk!