Building a Meaningful Investor Network

This week's tip: how to build a meaningful network for your fundraise

One of my old fund’s portfolio company became a unicorn last year.

Funnily enough, we didn’t back the founder the first time we met him at pre-seed. In fact, we rejected him at his seed round too!

He didn’t get angry at us for rejecting him though. Instead he kept in contact with us, kept showing the growth his company was making and built a real relationship with my colleague.

It seemed that the third time really was the charm - we ended up leading his series A.

Hopefully this shows you a part of why building a network is paramount to successfully fundraising. This founder could have easily burnt bridges with us when we rejected him, but instead he used it as a spring board to carry on the conversation and build a real relationship with us for future rounds.

Which in turn made it easier during his Series A when we finally wanted to invest into him.

Now…

I could easily ask ChatGPT on how to build relationships with investors. It would blurt out the top10 generic ways to do this.

For example, 1. research VCs (duh.), or 2. attend conferences (double duh.), or even 3. keep in touch (no way!).

But let’s face it, that’s cheating and not exactly helpful to you (I’ll let you do that yourself!).

So instead, here’s 6 steps on how to make a functioning network specifically for fundraising:

Step 1: Create a CRM and add every person meet

The most common mistake I see founders make when I speak to them about their fundraising is that they don't formalise their network.

Their relationships are sporadic and ad-hoc, going from email to email every week hoping that someone will pop out of the blue and introduce them to someone else.

As a result, founders at best only message 50% of the people they meet, and at worst, they never help or ask anyone back.

The best founders I've met had a close connection to their network, and actively spend time nurturing it.

Creating a living document that includes every person you've met is the start of how you do this.

This will include scrolling through every LinkedIn connection, every person you've emailed, and even Facebook or Twitter contacts. If you think, even for a second, that they may be able to assist you and you wouldn't mind messaging them, add them to your CRM.

​This is not something that will take a short amount of time, nor will it ever be "finished", but you have to put everyone into a central hub.

Step 2: Note them properly on all information you can get

The second thing I see founders mess up on when they don't formalise their network is they leave everything to chance.

They have a high-level understanding of people in their network, but have no clue on how they can help or what the relationship has amounted to so far.

You don't just want all the people you add to be names on an Excel sheet. You need to understand the following:

• when you last met
• any action items you can do
• how often you will meet with them, and
• how you can provide value to them going forward

The goal here is to have a document that allows you to know everyone in your CRM like the back of your hand. This is the foundation for your network and in the future, your fundraising network.

Step 3: Genuinely give value to these people. Help them in every way you can

When founders come to me three months away from running out of cash asking how they can leverage their network, I know it's going to be hard as hell. Why?

Because they will be asking everyone in their network for help, even though they haven't helped those same people out yet.

It's a 10x harder sell to ask for help when you've done nothing. It becomes transactional. In-humane.

Think about this for a second: would you help someone out if they ask you straight away or after they've already introduced you to 3 people who helped you before?

You have to take a long-term view of how you build relationships.

If you want someone to introduce you to investors for a fundraise, you should be building that relationship over 12+ months. All the while giving your own introductions, your unique insights, invitations to opportunities or events.

So when you do ask for that introduction? They are already willing to do it.

You have to think in terms of years, not months, when considering your approach. You have to build real value to everyone you speak to.

Step 4: Create a CRM of the 100-150+ investors you want to meet

This is where we start to formalise and understand our network for your fundraise.

Your goal is to find 100-150+ investors that you would want to speak to when you launch your fundraise. Yes, you read that right - 100 names at a minimum!

These should be highly curated investors that would actually want to invest into your company potentially.

P.S. with investor lists that can reach the tens of thousands, it can take a lot of time to sift through to find 150 names. Consider hiring someone on Fiverr or having someone on your team go through these lists based on specific criteria such as geography, sector focus, fund size, and stage etc.

Step 5: Identify connections in your network

Next, we need to identify who in your network can connect you to the investors you’ve added in step 4.

If you've done step 1-3 right you should have a functioning large network who would connect you to a large percentage of investors in your list.

For some investors you won't have a warm connection, but this is the beauty of formalising your network over a long time-frame.

If you've done this correctly, you will see where you are missing connections. You can start to plan HOW you get that warm connection, and with enough time and organisation you can reach so many more investors.

P.S. I always say you should be aiming for 1-3 warm connections into ~70-80% of your list by the time you fundraise.

Step 6: Rinse and repeat

Once you reach this step, it's time to go back to step 1 and start the process all over again; making your network closer and bigger every time.

This document will constantly change and be updated, and will be with you for every fundraise you do until your exit.

As you, the founder, grow in size and stature, so will this document.

Remember that building relationships takes time and effort. Be patient, persistent, and always respectful of other people's time and priorities.

And always think in years, not months.