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How To Build Relationships With Investors: A Matter of Research

Updated: Jan 4, 2023

Some of the most important relationships to build are with prospective investors.


TLDR: One relationship can make the difference to you and your business. Warm introductions are best. Being well-researched is essential to finding, establishing and maintaining valuable relationships.


So how do you do this most effectively?


Listen to the full Q&A below or read and listen to a specific question.


You can listen to the full Q&A below:


You can also view this article on Ship Shapes Medium page here


Contents of Questions asked

  1. Why is building a relationship with individual investors at VCs important?

  2. How to build a relationship with an investor?

  3. Why does a warm introduction increase my chances of connecting with an Investor?

  4. What do you need to do when you’re offered a warm introduction?

  5. Why is networking important in the Venture Capital industry?

  6. Why would a VC investor be more likely to engage with me if I am well-researched?

  7. How can I maintain a relationship with an investor once I’ve formed one?

  8. Does a good relationship give me a competitive edge over other founders or startups?



1. Why is building a relationship with individual investors at VCs important?

You can’t interact with a ‘firm’. It’s individuals that make the difference.


Getting funding from a VC is a sale you are making.


It takes one person to make the decision to champion you.


Not every one who champions you can see you over the finish line (no matter how hard you may both try). But by building a relationship with an investor, you’re ultimately creating a champion for your business within a VC firm.



2. How can I build a relationship with a VC investor?


There are a number of ways of doing this.

But how do you maximise your odds?


Building a relationship with a prospective investor is going to be derived off the back of the research and time you put into understanding what drives that individual prior to engaging with them or finding a route to an introduction to them.


Some people are well connected and can utilise their own network, this gives a higher probability of a warm introduction, but doesn’t guarantee it’s a good route.


Research de-risks the approach for both the founder and investor (and introducer).


If we think about it from the perspective of the entrepreneur, you want to be able to show why it is that that individual will take an interest in your business and come to a positive outcome on that decision.



3. Why does a warm introduction increase my chances of connecting with a VC Investor?

So connecting with individuals via warm introductions is a kind of social proof.


If one of your best friends gives you an introduction, you are more likely to engage positively with the person who’s being introduced to you.


Because, there’s a certain level of social credit that ultimately, we as individuals have.


We essentially assign certain values to the individuals within our network, and how reliable they are.


All of these factors influence how we receive introductions and therefore, if you can get a warm introduction to a VC, you are again, changing the odds in your favour because you go in there with the social proof or social credit of the person who’s making that introduction.



4. What do you need to do when you’re offered a warm introduction?

There is a general convention around this, it may vary from individual to individual, but it’s worth repeating.


But in essence, think about the best way to be introduced.


You probably want to distil into a few sentences:


What it is you do (often referred to as a ‘two-liner’)

What you’d like from the conversation (the ‘ask’)

Ultimately, that’s really what should guide the way that you formulate that introductory piece.


You can also include visual materials that help you convey the power of your business.


Including a positive reference as well is always helpful, if that’s possible for the person who’s doing the introduction.



5. Why is networking important in the Venture Capital industry?

Networking can help generate social capital.


Business today is still mostly conducted via human relationships.


Even with the digital tools at our disposal, networking and targeted approaches are going to remain important.


That remains the case in VC and in Investor networks, in many ways more so!



6. Why would a VC investor be more likely to engage with me if I was well-researched?

Having done your research means that the person on the other side of that conversation will see that you're credible. Having that level of credibility means that the individual is much more likely to engage with you because they can see you know what you're talking about. I think this actually goes for both sides of a conversation with VC.


So not just a VC can see that you've done your research but also if you're an entrepreneur, you want to see that the VC sat across from you is going to be bringing you more than just capital; are they genuinely a Smart Money VC? If not, they're either perhaps better suited to filling out a round than they are to take a board seat.



7. How can I maintain a relationship with an investor once I’ve formed one?

All relationships require maintenance with a case of engaging usually on common ground.


Finding proof points or news to share helps to build further common understanding.


It also helps prove/disprove aligned interests, saving you both time and energy!


There are lots of individual relationships that fall by the wayside, despite the best efforts of both parties, because ultimately interests might no longer align.



8. Does a good relationship give me a competitive edge over other founders or startups?

It may be unclear how many founders are fishing in this in the same pool for funding.


So it is extremely unlikely that a direct competitor at the same point in time is looking to raise the same level of funding from the same VC.


But other startups are still competing for the same finite resource.


So, yes, building a better relationship with your individual champion at a VC does help.


It affects whether or not your proposal for investment will be taken further.


Crucially it affects the steps that your champion is willing to take in terms of pushing forward your proposition internally.


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