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Venture Capital Funds

There are many ways to go about approaching an investor for venture capital funds. Some are good, some are bad, and some are just downright ugly! Below is a guideline for some general rules to follow when reaching out to any investor for venture capital funds.

A few basic rules

Do your homework - When looking for funding, many entrepreneurs make the mistake of reaching out to every single person whose name tag includes the word "investor" on it. This is a huge mistake because it wastes your time and also the investor's time. Just because that person is an investor, doesn't mean that they specialize in your particular industry. So do your research and investigate the investor's current investment portfolio and strategy to see that it is a good fit before making your pitch.

Be Concise - Whenever you are approaching an investor for venture capital funds, be sure to make your initial contact concise! Keep in mind that most investors see dozens of proposals in a day and don't have time to read your 30-page business plan. Instead, send a one or two paragraph introduction of your company and how it relates to that particular investor's strategy.

If you do the proper research in advance and make your initial contact concise, you'll greatly improve your odds of at least landing a meeting with an investor. But, if you want to ruin all hope of ever being funded, feel free to give one of the options below a shot!

Here's how NOT to solicit investors

Every successful entrepreneur knows that there are certain ways to reach out to investors and there are other ways that any sane person would never solicit them. When it comes to raising capital, if you want to be a successful entrepreneur, here are a couple of things that you should never do:

Mass Emails - Never send out mass emails with an executive summary or your entire 30 page business plan attached. This is incredibly irritating to potential investors. You not very likely to land funding with this method because it shows investors that you haven't done your homework on their particular firm or that you don't have the courtesy to take a couple of minutes to write a personalized email to them.

Hype - If you start by saying "it's the deal of a lifetime", you might as well save the investor the trouble and delete your own message before you even send it. We see this all the time at Invstor.com and we know first hand that this is a pet peave for most investors. These messages have a multi-level marketing (MLM) feel to them and aren't usually received warmly.

If your opportunity is truly the "deal of a lifetime", then you won't have to use hyped-up language to promote it. The opportunity will sell itself. Many entrepreneurs try to oversell their idea with this headlines, when in fact, these messages tend to immediately turn away legitimate investors; who likely will never even read your email or ad.

Trade shows - Going to "trade shows" for investors is probably not the best idea for a couple of reasons. These shows are usually attended by second rate investors that may be less than ideal partners for your business. Legitimate investors tend to receive their deals through trusted referrals (free of charge).

They spend their time and money going to trade shows to find funding opportunities. Also, if your business is truly fundable, you shouldn't need to pay money to attend one of these shows. You'll often be able to contact an investor directly and work from there.

Summary
Investors are people too and they have busy schedules. Do your homework and be concise when reaching out to them. Avoid such tactics as mass emails and hyped up language in your messages. It will go a long way in improving your odds.