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Prep

Funding 101: Prep

 

The Email Pitch

In today's world, you're likely going to pitch far more investors through an initial email than you will in person. A great Email Pitch won't necessarily get you a meeting but a bad one will definitely prevent one. Therefore creating the perfect Email Pitch is essential.


The perfect Email Pitch is a little longer than a commercial but not nearly as long as an infomercial. Your goal is to pique the investors’ interest by tapping into each of the key areas they are interested in.

Key Ingredients

Investors hear hundreds of pitches per month, but in each case they are looking for a few key ingredients that make them lean in and ask for more.

The key ingredients for an email pitch can best be described by what the investor is trying to ascertain as quickly as possible:

Ingredient

Investor Question

Subject Line

“Should I open this?”

Personal Connection

“Is this person legit?”

Elevator Pitch

“What do they do?”

Traction

“Does this company have momentum?”

Team

“Can they pull it off?”

Social Proof

“Does someone credible vouch for them?”

The Ask

“What do they want from me?”

 

Your goal is convey this information in as few words as possible while pushing all the buttons that will get the investor interested.

Subject Line

Just like you, investors get tons of email, and just like you, they ignore lots of it. Investors are regular people that are trying to make sense of all the noise in their inbox like everyone else. So it helps if you can make their lives a little bit easier by catching their attention in the right way.

Examples of Bad Subject Lines:

 

Subject Line

Why it’s Bad

“Investment Opportunity”

Meaningless. She’s an investor; of course you’re sending an investment opportunity.

“Your Company Name”

Not terrible, but unless she’s heard of you, it doesn’t help.

“Earn a 5,000% Return!”

Any entrepreneur selling a “return” gets deleted immediately. Real investors look for great companies, not big claims on returns.

In each case your problem is that you’re not making the subject relevant, or at worst, you’re turning the investor off altogether. This isn’t that hard. Just look for ways to make a strong personal connection. Be human about it.

Examples of Good Subject Lines:

 

Subject Line

Why it’s Good

“Friend of Greg Smith, NetFlix.com”

Personal Connection. You’re focused on the personal relationship which is far more likely to get attention than an anonymous company name alone.

“NetFlix.com: Online DVD Rentals”

Tag Line. Combines who you are with what you do. An investor interested in the online DVD space is far more likely to open this email because they know it’s relevant to what they care about.

“NetFlix.com growing at 300% per month”

Traction. Be careful here, because unless your traction is something the investor will understand or will blow them away, it won’t help you.

“NetFlix.com, Founded by
ex-YouTube CMO”

Team. The investor may have no idea who NetFlix is, but they will certainly want to know what the former Chief Marketing Officer of YouTube is up to (it helps to be the former CMO of YouTube in this case).

You can probably detect a pattern here. Your subject line is your one opportunity to take the most saleable element of your business pitch and distill it into a few words. If nothing about your pitch is likely to get this type of reaction from an investor, be mindful of that if you don’t get a response back. Just like you, they are looking for something special to respond to.

 


Personal Connection

Every good introduction starts out with a meaningful personal connection. It's the difference between a warm handshake and a cold call. Starting your Email Pitch with a well thought-out personal connection makes all the difference in the world.

There are very few legitimate investors in the world, so sending out a blast email to all of their addresses with the same generic introduction is a horrible waste of opportunity, and beyond that, it's just bad etiquette.

 

Unless you're talking to an 80-year old curmudgeon banker, people in today's world like to be referred to by name, and not Mr. Investor.

It's very unlikely that you personally know the investor you're reaching out to, or even have a personal connection to them, so if that isn't the case, here are a few ways you can make your intro more personal:

Use their First Name. Unless you're talking to an 80-year old curmudgeon banker, people in today's world like to be referred to by name, and not Mr. Investor. You'll earn more points by being personal than you'll lose points by not being formal enough.

Reference a Friend. The best possible introduction is through a mutual acquaintance. If you cannot get introduced through a friend then your next best bet is to at least point out that you know someone in common. Personal relationships are often exposed on every social network from Linkedin to Facebook. Look for every possible opportunity to connect your social circles so that you can give some credibility to your person.

Cite their Background. Almost every investor you'll talk to has some sort of background information online, whether it's through Linkedin.com, their blog, or their corporate Web site. Research who they are as a person and look for a connection that you two might share. Maybe you went to a similar school or they have invested in an industry you are getting into. Doing your homework goes a long way.

Here's an example of a really bad introduction:

"Dear Mr. Investor, I have a business opportunity that you may be interested in..."

You really can't get more impersonal than that. That's the kind of terrible introduction you see from spammers trying to offer you a share of their "$21 million fortune that they need your personal help to recover". It's terrible, non-personal, and boring.

Now let's add a little more personality to the introduction:

"Dave, I noticed that we're both friends with Greg Smith from Fancypants University. I'm in the process of launching a company called NetFlix.com that provides mail order DVD rentals and saw that you were an early investor in Blockbuster."

In this case the investor "Dave" knows you are referring to him personally because you took the time to get his name right and address him as a person. You then connected him to Greg Smith which means you've got a social connection that he can reference you by. Lastly you mentioned the Tag Line for what you do by connecting that to something he's done in the past. Congratulations - you've made a personal connection.

Building the right personal connection is really a matter of common sense. You're likely bombarded with offers from advertisers all the time. You know junk mail when you see it and you know personal mail when you see it. Think about your Email Pitch like those solicitations - the more personal it is, the more likely it's read.

Elevator Pitch

Your Elevator Pitch is the heart and soul of your email, and you shouldn’t be afraid to get it as quickly as possible. Without a warm introduction you may come across as too forward, but a long introduction that doesn’t get to the point will be equally annoying to an investor!

Even a bad pitch can be salvaged if it’s coming from the right source.

In just a few sentences your Elevator Pitch should convey three distinct points – the Problem you solve, the Solution you have created, and the Market Size your potential customers.

If you haven’t already done so, read our detailed explanation of “Crafting the Perfect Elevator Pitch

In our example we reference NetFlix.com in a very simple way to identify the Problem, Solution and Market Size in just two sentences:

“NetFlix helps over 90 million Americans avoid driving to the video store by delivering their movies directly to their doorstep without ever paying late fees.”

In the context of our perfect email pitch, we want to draw attention to this passage quickly, and make sure it’s refined down to the bare essentials.

A quick side note here: although “what you do” is obviously important, you may be surprised at how many investors will actually skip over this part of the email and go right to the other points such as “Traction”, “Social Proof”, or “Team”. We’ll explain these in a moment but keep in mind that while you’ll want to nail the Elevator Pitch, the rest of the elements of these emails are just as important in hooking an investor’s interest. Even a bad pitch can be salvaged if it’s coming from the right source.

Traction

Above all else, investors care about "traction".

Traction is an indication that the business is quickly gaining momentum. Every investor is interested in a business that's taking off.

If we were to say "Our business has grown to over $50 million in sales in just the first two years" you would likely be interested in knowing more without even knowing what we do. The traction alone sells the opportunity.

You don't need to have a huge spike in sales to get traction (although it sure helps). You can show traction through an increase in Web site traffic, customer demand, strategic partnerships and key hires.

For more information on the types of Traction that are important, click here.

Let's add to our email introduction by providing some traction:

"In the past three months we've added 10,000 new users to our site and are doubling that rate every month."

When an investor reads that line she is going to instantly zoom in on the words "three months", "10,000 new users", and "doubling every month". Those key stats imply a rate of growth that looks like a hockey stick on a chart that points up and to the right. Your Traction should always focus on an area of the business that is growing incredibly fast or is wildly positive.

Notice that we didn't cite revenue numbers because we probably don't have any yet. We're showing that the demand is definitely there, which may imply that revenue is forthcoming. Your Traction is all about momentum, wherever you have it most.

 

Team

You'll want to focus on what aspects of your Team's background are most salient to the success of this particular company. It's great that your Chief Technology Officer earned his Doctorate from MIT, but if you're building a fruit basket company, that may not be the most relevant piece of information.

The best references from your Team indicate that they have either done this before successfully or have some specific domain expertise that is highly relevant to the product or market you're servicing.

In this case, the fewer more targeted references the better. It's always best to combine the particular title or experience they have had with a well-known brand or entity they earned that experience from:

"Our team includes the former Chief Marketing Officer from YouTube and the Head of Digital Distribution at ABC Networks."

In reading this one sentence an investor is thinking "OK, if these guys are building a mail order DVD business it's helpful to know they have relevant marketing expertise to acquire customers and logistics expertise to mail lots of DVDs."

Showing your Team's highly specific expertise is a great way to both promote yourself and allay fears that you have no idea what you're talking about! (Yes, those fears exist).

Social Proof

Your Social Proof is the endorsement from others that you're legitimate. Like any type of endorsement, the value of your social proof is proportionate to the credibility of those endorsing you.

Think about how much of a difference the right Social Proof can make. Here's your pitch with no Social Proof attached to it:

You: "I've invented a computer that can be controlled by your thoughts."

Investor: "You're insane."

Now let's deliver the same pitch with just one endorsement:

You: "I've invented a computer that can be controlled by your thoughts. Bill Gates just invested $100 million of his own money to start production."

Investor: "Please let me invest."

In both cases your pitch is exactly the same, but when backed by Social Proof you go from getting escorted out the door by security to getting the red carpet rolled out to you.

There are many ways to build Social Proof around your company, and as you can see, the importance of that proof is critical to getting real attention from investors.

Advisors. Adding credible Advisors allows you to draft off of their experience and market worth. It signals to investors that someone with genuine credibility (that's not you) is willing to put their name behind your company.

Customers. Demonstrating that real customers are using your product indicates that there is real market demand. Signature customers, such as Fortune 500 companies, celebrities, or well-known users often help establish the value of your product as reflection of their status.

Media. Having been covered in the media is often a reflection that someone thinks your product is worth talking about. Once again, the more important and relevant the news outlet, the more valuable the endorsement.

Investors. Even if the existing investors have only put in a very small amount of money, the fact that someone is willing to write a check for your idea implies there might be some level of investment value in your company.

Looking at our pitch for NetFlix, we would likely try to establish some Social Proof by highlighting the Advisors we have added to our team:

"Our Advisors have each personally invested in the company and include Dave Brown, (VP Channel Sales, HBO), Rob Black (Former President, Paramount Pictures) and Jeff Orange (SVP, Yahoo!)"

Similar to the Team section, your Social Proof should be a direct reflection of how the relevance and credibility of that proof directly reflects on the quality of the idea. Unless they are industry celebrities, their names are almost irrelevant here. What investors will key in on is their titles and the companies they worked for.

 

The Ask

Assuming you've hit on all the high points of your Email Pitch, you should conclude with "The Ask". The Ask should include three main points:

Raise Amount. How much are you raising? Be very clear. If you're raising a total of $500,000 then say so. Investors tend to have minimum and maximum thresholds for their investments so it makes sense to let them know whether you're in their sweet spot.

Funding Stage. Similar to the raise amount, investors want to know at what fundraising stage you're at (Seed, Series A, Series B, etc). If you're unsure of what this means, find out and be clear about how you communicate it.

Timeline. Like any good correspondence, you want to finish with a specific request for someone's time. Obviously you're reaching out because you would like to discuss the opportunity, so focus on what an available time to meet might be. If you're going to be in town next Thursday you can mention that, but recognize you're more likely to meet on the investor's timeline, not yours. Even so, you should at least create a reference date to begin with.

Here's a simple ask that lets the investor know what the overall goals of the fund raise are and when they can potentially talk to you next:

"We're raising $500,000 in a Seed Round which we'd like to discuss with you next week if you're available."

You can modify this based on your situation with the investor, but if you're not very familiar with this person, give them an adequate window with which to setup a meeting.

 

Final Product

Here's the final product. Notice how it's short and to the point. The investor is going to read this pitch on his iPhone while driving to meet his wife for dinner. Think about whether or not this will cause him to risk an accident by reading further (just kidding... sort of).

 

Personal Connection

Dave, I noticed that we're both friends with Greg Smith from Fancypants University. I’m in the process of launching a company called NetFlix.com that provides mail order DVD rentals and saw that you were an early investor in Blockbuster

Elevator Pitch

NetFlix helps over 90 million Americans avoid driving to the video store by delivering their movies directly to their doorstep without ever paying late fees.

Traction

In the past three months we've added 10,000 new users to our site and are doubling that rate every month.

Team

Our team includes the former Chief Marketing Officer from YouTube and the Head of Digital Distribution at ABC Networks.

Social Proof

Our Advisors have each personally invested in the company and include Dave Brown, (VP Channel Sales, HBO), Rob Black (Former President, Paramount Pictures) and Jeff Orange (SVP, Yahoo!)

Ask

We're raising $500,000 in a Seed Round which we'd like to discuss with you next week if you're available.

 

In less than 150 words we've establish a personal connection, explained how we're solving a big problem, begun moving the market, attracted highly relevant talent and advisors, and what we're looking to accomplish. Easy.

 

Summary

Your Email Pitch will be a critical tool that you use to communicate with investors. The key with the Email Pitch is to follow the system and make it count. Make sure you reference a mutual connection, include your elevator pitch, mention traction, showcase your team, offer social proof, and ask for a meeting.

A well-written and eloquent email pitch can help you get in the door to meet with an investor and give a full presentation. Take the time to personalize each email and make it count – you may only get one shot.