Q&A: Cold Email

Question:  Will an investor consider an investment via cold email, if that email contains complete info about the business?

In a world of no scarcity, I would read every email from an entrepreneur and take every coffee with them.  I rarely fail to enjoy hearing about someone’s business.  And, if you could remove the financing agenda, I would probably enjoy all of them.  (What I mean is: since I turn down 99 out of 100 investment opportunities, and in general decide quite quickly, I enjoy the meeting itself but that enjoyment is reduced by thinking about having to say no the the entrepreneur, and by the fact that my financing agenda and their fundraising agenda dilutes the quality of discourse in the meeting: they don’t want to talk openly about the things that are likely to kill their baby.) In the real world, the issue is: as an overloaded investor, should I take the time to qualify this opportunity? There’s a first level filter: should I read this email. And a second: should I meet this person for an hour. The introduction, even from a weak link in the network, will get you past the first.  As you say, you’ll tell me “everything related to the startup” — in my experience to qualify an unqualified lead via email as to whether it’s worth a meeting, when they (rarely) give me enough information to do so, might take 10 minutes of undivided attention. The value of an introduction is: I assume the contact has been, to some extent, pre-filtered as credible, and thus I’m much more likely to spend the 10 minutes reviewing the information. The ways to increase the probability of me reviewing the information in enough detail to decide whether to take a meeting:

  • Get an introduction, preferably a strong one, but even a weak one
  • Include all the relevant information to make me understand the opportunity is interesting, and present it in a format that is easy and quick to digest
  • Write in a way that signals you are credible.  How to do this would be a whole ‘nother Quora question, but let’s just say some emails feel credible and others do not, just from the tone, formatting, and language.  When it starts: “Dear Mr. Hannah:  Good day sir.  I would like to introduce you to a revolutionary new invention…” I’m reaching for that Y key.

Some people try to vault past the email review and go straight for the meeting.  This takes the form of asking for coffee on the back of an introduction with no context as to the details of the opportunity. I assume this strategy is rooted for most in the idea that if you can do it successfully, you get an hour of my time to present your idea to me with good salesmanship and seeing you, rather than the cold light of powerpoint with no context.  Maybe some at the margin are worried about confidentiality, but that’s less so these days as even angel deals are usually live sites. This strategy only succeeds when your track record is so compelling I want the meeting regardless of the quality of your idea, or if the quality of introduction is high and so trusted that I take it on faith. However, I find a lot of startups misjudge this jump and fall into the canyon.  They take a relatively weak introduction (which they probably could have known was not a close connection to me) but try to vault straight to meeting.  Thus ensues one of two things:

  1. Wary of being rude, but not willing to waste an hour with no context, I am inadvertently rude by ignoring that email in my inbox and not replying, being self-conscious about trying to explain that no reasonable busy person would commit 60-90 minutes of their time with no context, without seeming like a self-centered asshole.  Email sits in my inbox for a few weeks before I reply, as I skip over it for more enjoyable tasks
  2. An awkward back and forth exchange where they have said “let’s get coffee… how’s tuesday?” and I say, “umm… can I see some summary information on what you guys are working on to qualify whether it’s even within the scope of what my firm would invest in?”

You should be aware that, in attempting to skip the step of emailing a summary of your business, there is downside as well as upside. Upside: you get a meeting, where you otherwise wouldn’t have, and maybe you get the investor interested even though he wouldn’t have been interested otherwise Downside:  investor starts in a negative mindset, fails to reply or declines the meeting due to his perception (possibly untrue) of the uncomfortable and (arguably) disrespectful attempt to hijack his calendar through giving him only two choices:  meet, or be rude, and hoping you’ll increase the probability of the former by removing the third option: evaluate the opportunity to judge your interest level. I would urge you to believe in your idea and that it will be good enough to stand as appealing on its own, and accept that if it doesn’t, the probability of investment was so low anyway that the meeting would have been a waste of your time as well as the investor’s.   See Quora page here

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Written by Josh Hannah
Josh Hannah joined Matrix Partners after a career as a serial entrepreneur (Betfair, eHow, wikiHow.) Read more about Josh.
  • MLB-Syndicate

    From a first time founder (very early cycle) this is great insight Josh…be on the look out for that email in the near future ok?!

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