You know the old saying, “It’s not what you know, it’s who you know?” This rings especially true for startups seeking funding. Having a solid network of connections can often be the difference between your startup getting funded or not.
But if you’re new to the game, where do you begin to make those crucial introductions? Let us show you how important networking is and what you can do to turn it into your biggest asset as a founder.
Why networking is a founder’s biggest asset
Networking is the biggest and most important currency in business. Founders who take the time and effort to consciously build a strong network not only grow their chances of getting funding for their start-up, but they also open themselves to other opportunities – A study by Chicago Booth showed that professional networks are effective for founders in many ways –
- in doing due diligence on a market or opportunity (42%)
- get management advice (41%)
- learn about a new industry (38%)
- find professional service providers (37%)
- identify best practices (37%).
Networking is an important way to validate opportunities, connect to resources, and access information. Of course, it’s not just about having a large network (or 5000+ connections on Linkedin) it’s about how you use your network. Read the few tips below to learn how you can network like pro (even if you’re not comfortable doing it).
While some recommend to approach networking strategically, by setting clear goals and objectives, we recommend keeping your options open. Of course, you need to have an idea of what you’re networking for, but focus on meeting or connecting with people, not “investors”, not “key players”.
Different people and groups will be able to support different goals that you have. Try to make this difference and don’t always “sell” the same thing. Actually, try to sell as little as possible. Instead, try to provide some value yourself. Reciprocity is key.
Give and you shall receive
As networking is your biggest asset, the same goes for everyone else. Consider yourself an asset for your network, and think of what you can provide for them – can you maybe help less experienced founders with tips from your business journey? Or maybe an investor that wasn’t a good fit for you is a good fit for one of your connections. Make that intro if you can. Help others as you want to be helped.
Tap into what you already have
Building your network doesn’t mean you should start from scratch. Your existing relationships can serve as a valuable foundation for expanding your network and making crucial introductions in the scene. By leveraging these relationships effectively, you can tap into the knowledge, connections, and support of individuals who are already familiar with you and your work. And since they already know you, making intros for you will feel more natural.
Think of your schoolmates, ex-co-workers, bosses, or anyone you have ever met in a professional environment. Maybe it’s someone from an industry you’re looking to enter or someone that can provide some valuable feedback for your MVP, go-to-market strategy.
Seek warm intros
When it comes to networking for fundraising, you shouldn’t just go straight to the few specific VCs you think would invest in your company. Don’t network just with VCs. Seek warm intros. Investors love warm intros, whether they come from a founder in their portfolio, other investors, LPs, or people they know, in general. But legendary investor Marc Andreessen explains precisely why that is:
“Getting a warm introduction to a VC is a basic test of networking skills.… It turns out that the skill required to network into a VC is the same as the skill required to network into a customer, into a supplier, into a distribution partner, into the press, into an executive search firm. And so if a founder can’t navigate a network into a VC firm, it is unlikely that founder has the skills to navigate the other networks required to succeed in building a company.”
Attend events – IRL > Online
Yup, the good-old events where everybody is shaking hands, reaching out, and socializing. For some, that might seem daunting. But as investors who attended many events in the past months, we can tell you that this is where the most important connections are made. And we love it too. People feel the need to socialize, even more nowadays, after the pandemic.
Even if you feel weird talking to strangers, you just need to understand that most people on-site are there for very similar reasons, and the next big business or funding opportunity for you might just be one “hello” away.
Social media is still your friend
The good news is you can still network from the comfort of your own home. Don’t neglect IRL networking, but rather strive to find a healthy balance between the two. Social networks, in general, are super beneficial for your networking efforts in many ways.
We’re not talking about spam-like cold outreach efforts. But rather about providing some value yourself online, talking about your experiences, and getting noticed. Engage with others and, when the time is right, send that message.
You can also use social media or other networks to boost your networking efforts by researching in advance the people you are looking to talk to at physical events. Especially for investors, showing that you have done your homework is a positive signal and it will help you a lot.
Be proactive and focus on relationship-building
Always Be Networking. To expand your network and increase your chances of finding the right investors, make it a habit to constantly reach out to new contacts. Actively search for potential investors, industry experts, mentors, and fellow entrepreneurs who align with your startup’s goals and values.
Even more importantly, follow up on connections and nurture your existing relationships. Help them whenever you can or just send a friendly “How have you been?” once in a while. Staying on the top of their minds gives you access to their network and networking efforts as well.
While a limited network may initially seem like a significant hurdle in the startup funding journey, it should not discourage you from pursuing your goals. By recognizing the importance of networking and applying the advice we gave you, you can overcome the challenge of a limited network. Remember, building a network takes time and effort, but the connections you make along the way can open doors to funding opportunities and invaluable support for your startup’s growth.
At Fortech Investments, we work with start-up founders as strategic partners, meaning that we offer added support beyond the capital that we invest. We provide founders with our own entrepreneurial networking, allowing them to connect with other founders, investors key players in their industries, potential clients and all sorts of experts. If you’re an early stage start-up in Healthcare, Manufacturing, Automotive, Fintech and Energy reach out to us here or at firstname.lastname@example.org