They say the best way to get in front of an investor is to get a referral from someone in your network. What if you don’t have a existing network who can refer you?
Easy. Buy one!
In the early days raising angel investment for Plurilock, my professional network was in the wrong city and included the wrong people. It didn’t include the angel investors I needed, or the people who could introduce me to them.
I applied to pitch at every angel event, fundraising forum, and startup competition I could. But I also made a list of every startup-focused service provider we worked with.
Here’s the secret: most service providers offer the same, commoditized service. The way they differentiate amonst themselves is the people they can introduce you to. Because they mingle with entrepreneurs and investors in the ecosystem, they are in a position to connect fledging startups with financiers as part of their every day business.
I had the obvious service providers to start with:
- Accountants/Book keepers
And the not-so-obvious ones:
- SR&ED consultants
- Government grant contacts (eg. NRC-IRAP ITA, Mitacs BD Director, etc.)
🇨🇦 Canadian pro-tip: You’ve probably heard of IRAP grants, but there are also reps focused exclusively on connecting startups with financing.
When going through the contacts, I made sure that everyone we worked with fit these two criteria:
- Tech specific practice leads (eg. RBC has a Tech practice, specifically geared towards startups), and;
- National organizations that have presence in more than one city
With the list complete, it was time to start the introduction machine.
How to ask for the introduction to an angel investor
After you get signed up with your new service provider, here’s the script to follow to get angel investor leads.
- Schedule a lunch with your new service provider. Pick somewhere reasonably expensive – they are paying, and as a starving entrepreneur you could use some nourishment.
- Ask for referrals to a specific type of investor:
“Bill, I’m looking to speak with angel investors interested in FinTech, AI and B2B… is there anyone in your network you could introduce me to?“
- Follow up the same day with the list of introductions they offered to make, and include
- 3 sentence description of your company,
- link to your investment deck, and;
- link to your video
This will get the introductions flowing.
But wait! There’s more!
Bigger companies = bigger network
Before you travel to another city, go back to the banker/lawyer/whoever and explain:
- You’re looking to grow your network in the target city
- You’ll be there X date to X+4 date, and can you meet with their local partners?
On one of my recent trips from Vancouver to Toronto, the best set of introductions came from a referral from a junior associate immigration lawyer. That associate was in a small office in Calgary, and was neither senior enough or in the right city to have the right connections. But, I put in the time and had lunch while I was in town on other business.
With that relationship established, when I asked for help, she was more than happy to connect me to the senior partner in Toronto. This partner happened to work from a tech accelerator, connected me with all the relevant players in the city, and squeezed me in to an angel investor pitch event with a days notice.
This is the power of working with a larger firm.
How to 2X every introduction
Rather than working with one service provider exclusively, try to use two different firms. For legal, use one firm for immigration, and another for contracts. For banking, use one firm for your Canadian entity, and one for your US entity. For accounting, use a book keeper separate from your accountant. And so on.
In supply chain parlance, this is known as ‘dual sourcing’, and accomplishes two things:
- Keeps the provider honest knowing there’s more business available that they need to work to get, and
- Gets you two sets of introductions
I averaged about 6 introductions per service provider. Here’s how the math looks:
- 2x bankers
- 2x lawyers
- 2x accountants
- 1 SR&ED consultant
- 2x government contacts
9 referral sources * 6 introductions each = 54 well qualified introductions to angel investors.
That was good, but not great.
The real power was to rinse and repeat this process for each city you travel to. This takes your 54 well qualified introductions and gets you another 54 leads in each city.
What’s worked well for you?