What is the best way to find investors beyond your immediate network? Can social media be leveraged to prospect?
Social media can indeed be a good way to start the process of finding investors. The first thing to do is to use your immediate network to reach beyond it, and that’s where LinkedIn does a marvelous job. I just checked my statistics there, and it turns out that 14 million people can get a warm introduction to me through one or more people whom we both know. That’s a lot of people, and probably covers a good percentage of the active entrepreneurs currently seeking funding. What this means is that if you draw up a list of potential investors, the odds are very good that you will be able to find someone to introduce you to them.
Specialized networks are also very useful. They include the aforementioned AngelList, which includes several thousand individual investors, and Gust, the company of which I’m the CEO. Gust is currently used by over 40,000 angel investors and venture capitalists to manage their investment review processes, through their participation in one of over 1,000 angel groups or venture funds.
Because the number of companies seeking funding vastly outweighs the number of investors, it isn’t always effective to simply reach out to investors directly (although you can certainly try, and that does sometimes work). Instead, through a platform like Gust, you can share information about your company with investment organizations—such as angel groups or VC funds—that actively seek out companies to fund.
Simply go to https://gust.com/find-investors, and search through the database by industry, location and investor type to find potential investors that are most appropriate for your specific company. Then review their detailed profile to be sure that you fit the criteria they are looking for. One of the neat things about Gust is that if you are logged into LinkedIn during your search, the investment group’s profile will be automatically enhanced with a list of the people you know who can make an introduction for you. Pretty cool! For more information about using Gust as a fundraising tool, see my answer to What are the best tools for coordinating a fund-raising round?.
Most of the other ways to effectively use social media in startup fundraising are based on shaking your extended network tree to find other people who can introduce you, vouch for you, or bring you to the attention of potential investors. You can do this through Twitter, Facebook or any other site, with the goal being to get to the right investor the right way. Because the unfortunate reality is that most active investors are simply deluged with unsolicited funding requests, and therefore as a heuristic put significant stock in anyone they trust who can help them separate the signal from the noise.
*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *
Written by David S. Rose
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