Why Networking with Investors is Essential for Startup
Who do you know? And are you leveraging those relationships as part of your growth strategy? As founders, entrepreneurs, and CEOs, we can get lost in the numbers – especially if we’re pitching. When it comes to investors, what you know matters, but so does creating human connections. Networking with investors is crucial for the success of any startup, helping to establish valuable relationships that can provide access to funding, strategic partnerships, industry expertise, credibility and visibility, mentorship, and guidance. Here are some of the top benefits for startups in building relationships with potential investors.
Top Ways Networking with Investors Opens Doors For Startups
1. Access to Funding
Funding. If you’re a founder, it’s the thing you think about all hours of the day (and, often, the night). So you’ll be happy to hear that likely the most significant benefit of networking with investors is the opportunities it provides for accessing funding. By attending events and connecting with investors, startups can increase their chances of finding investors who are interested in their products or service, which is critical for startups in the early stages of development. In the early stages, once you’ve exhausted friends and family rounds, there’s a need for outside investor funding to help with efforts like product development, marketing, and hiring, among other things, making it easier to grow and expand the business – all at a time when there is little in the way of results and still plenty of risks. Networking is going to create the critical human connection needed to determine if your investor shares your interests and goals and help them feel comfortable taking a leap on these early-stage opportunities that are, by nature, higher risk.
2. Strategic Partnerships
No man (or founder) is an island. Exposure to investors offers opportunities that go far beyond funding alone. By establishing relationships with investors, startups can leverage their connections to other businesses and organizations which, in turn, can help them grow. Strategic partnerships open you up to new markets, increase your brand awareness, and provide opportunities to collaborate on new products or services. It also can boost reputation, by helping you gain credibility and establish yourself as a reputable business in their industry.
3. Industry Expertise and Insights
As an angel investor, I offer more to my investments than simply providing capital. I bring my experience, my own successes and failures, and the learnings I’ve taken away from them, too. Networking with investors gives you access to industry experts and insights to help you make better-informed decisions from knowledge of industry trends to customer behavior and regulatory requirements. This knowledge is invaluable, helping you make informed decisions – and avoid costly mistakes.
4. Credibility and Visibility
As I mentioned above, networking with investors and, in turn, their contacts, can enhance your startup’s credibility and visibility. This can help generate increased credibility and trust among customers, industry partners, vendors, and additional potential investors, among other stakeholders. Additionally, networking with investors can provide valuable exposure for startups, getting your name out there in a positive light, increasing your visibility, and building your brand awareness. Remember: by nature, early-stage startups are a risk for any investor, even seasoned angel investors like me who are not averse to risk. If I hear great things about your company from people I trust, it certainly doesn’t hurt when I’m considering funding you.
5. Mentorship and Guidance
As I said before, angel investors like me often bring more to the table than just capital. In addition to my financial support, I enjoy the experience of mentoring and guiding young companies to success. I remember the feeling of pride and the excitement I felt as I built and exited my own successful companies – and I remember the harder lessons gleaned from failure, too. Outside of specific industry experience, seasoned investors will be able to give you an outside perspective and draw from their life experiences, helping you think of ways to be more productive, and efficient, and even bolstering what some consider to be softer skills: being a strong communicator and leader (hint: these are critical skills).
For me, your ability to lead a united, focused team is often a make-or-break point in my decision-making to invest in your startup. Many investors have years of experience working in specific industries and can provide valuable advice and guidance to startups. Bringing them into your fold as experienced advisors can be a powerful way to foster your own success.
Building Your Network is Essential.
The term “networking” brings to mind the bad cheese-and-wine meet-and-greets that fill introverts like me with dread. That’s not what we’re talking about here. As a founder, part of your role is to find and nurture a community of experienced, driven mentors who are invested in your success – financially and otherwise, bringing with them strategic partnerships, industry expertise and insights, credibility and visibility, and mentorship and guidance. Building relationships with investors can open up new opportunities for startups and help them grow and succeed. If you’re a startup with a revolutionary tech solution and looking to connect with investors, we want to hear about you. Reach out – and for more information on how to find angel investors, build your pitchbook, and much more, check out our insights library.
Enjoy the ride.