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
You might also be interested in
Co-founder Equity Split: A New Framework to Objectively Divide Startup Ownership and Get Back to Building a Business
We’ve just released our free Co-founder Equity Split tool. It’ll give you a fair and objective recommendation about how to divide your startup’s ownership, so you and your co-founders will have a sensible, real starting point for this notoriously hard, crucially important conversation.
Many startup founders find themselves lacking clarity and direction when it comes time to divide their
With startup growth up 61% since 2014 and more investment programs emerging, it can be overwhelming for founders to know just where to jump in. As the most startup-friendly accelerator on the planet, MassChallenge has helped 835 startup companies around the world, who have raised over $1.1 billion in funding and created over 6,500 jobs. We have seen startups at
Update 2017: To help you understand how your startup will look to investors according to this methodology, we’ve created a fundraising feedback tool that will give you investor-level insight into your startup’s performance. In just about 15 minutes, it will tell you how much money your startup is likely to raise, where you can find that capital, and what to
After less than a year, Glassbreakers is now a team of 10, we have thousands of active users on our free product, we’ve expanded into enterprises with paying customers and raised over a million in seed funding. After a few of my Glassbreaker matches inquired, I started to reflect on what it’s like to build a startup
The median investor looking at your proposal is in her 40s. Her eyes are going, not to mention her brain. I look at a lot of spreadsheets and analytic reports, and way too many are difficult to read and therefore hard to understand.
In an effort to make my life easier, I’ve summarized here the steps that will