Getting Connected to Investors
A little advice on getting connected to investors, with Frank Lo, founder of Mountain Vertical.
Several years ago, I founded my first startup, a retail company that I had ambitions of turning into a viable regional chain with potentially dozens of stores across the northeastern US. We raised capital and were firing on all cylinders with the opening of our first retail location (the proof of concept). Our business performed well, but in the end fell short of the numbers we needed to justify expanding into a chain. Along the way, though, I learned a million things about the entrepreneurial process that I’d love to share on this blog.
For this first post I want to offer some general advice on how to track down early investors. A major barrier that many young entrepreneurs face is that they simply do not have the connections to get funding when they need it.
It goes without saying that the key to finding the right early capital for your business is to seek out connections and expand your network in order to meet the right people.
One great place to start is to talk to other entrepreneurs. Within the entrepreneurial community, there is a lot of mutual respect between one another, and I’ve found that entrepreneurs are very nurturing of each other. Fellow entrepreneurs will often be more than happy to give good advice as well as connect you with people they know — other business owners, industry experts, potential business investors, etc.
It might not be obvious at first, but lawyers are also a great place to start. I have found that lawyers tend to have a wealth of good business connections, and because they are trying to pitch to you to become their client, they will often throw you a bone and hook you up with some good people to know in the industry.
When talking to anyone who might be able to hook you up with a good connection, whether it is a friend, fellow entrepreneur, lawyer, industry expert, or whoever else — never bring it up as “I’m looking for investors…do you know any?”. That is a little too upfront. Instead phrase it as “do you know any people who are experienced in this area and can offer some advice on my business?” You’ll have more success getting looped in this way.
On the same token, when reaching out to a potential investor for the first time, never pitch it as “I want to tell you about a great opportunity that you could invest in” – that is just bluntly asking for money, and potential investors don’t like being seen as only a dollar sign. Again, position the meeting more as “I am very excited about this business I’m starting up, and I would love to hear some of your advice as I move forward” Emphasis again on *asking for advice*. People are happy to weigh in with input where they feel they can contribute — in fact, this might actually allow them to feel more empowered to get involved. If they like your business enough, money talk may come later, but never open with it. Proper delivery and tact are critical to getting your foot in the door.
Frank Lo founded and managed Freeride Corp between 2006 and 2008. He currently works in consulting as well as runs Mountain Vertical, a ski resort stats and research site, targeted towards avid skiers and snowboarders.