Responding to Inbound Investor Inquiries from Associates
Once you have a startup for any considerable length of time, you will start getting seemingly flattering inbound emails from investors inquiring about your business. I get many of these each month.
Sometimes they come from firms I’ve never heard of, sometimes they come from well-known places, like Bain Capital. They are always from lower-level associates or analysts in the firm, such as this one, and this one, and this one, and this one who have all contacted me recently.
They all send more or less the same email:
John,
I hope all is well and you are having a great <insert season>. By way of introduction, I am an analyst with <insert firm>, a <insert location>-based growth equity firm that invests in rapidly growing technology businesses. AccelerEyes seems to be experiencing impressive momentum in an attractive market. We’ve really been exploring the GPU space, and I was hoping to get a chance to learn a little more about AccelerEyes’ position in the space, your specialized perspective on advancements in the space going forward, and how you plan to lead the company through a new phase of growth throughout 2013.
<insert a lot of blah, blah, blah>
I wanted to connect to learn more about the business, tell you more about <insert firm>, and to discuss whether there might be a fit for us as an investor at some point in the future. Do you have availability later today or tomorrow morning for a brief chat?
Best regards,
<insert name>
Note that they always say nice things about the company, and they always express interest in the market.
In most cases, these analysts have little idea about the companies they call and no real specific interest beforehand. Rather, they dig up a big list of small businesses and contact them in the hope of striking gold on an investment opportunity that other firms have missed. It’s a high numbers game; they have to call a ton of private companies to happen upon one that wants investors, is invest-able, and wasn’t already scouting out other investment firms.
Sometimes these analysts have more surreptitious motives in gathering intelligence to guide the strategies of other firms in which they are already invested, potentially your competitors, and they have no real interest in investing. Their only goal may be to milk you for information about the market.
These calls are almost always a waste of time, so I avoid them. I avoid them by applying a hard qualification the investors must pass to get a call with me. First, I try to reverse the information flow and see if they have anything interesting to say:
What can you show me about your research into the accelerated computing space?
Depending how that goes, I follow-up with a simple acknowledgement that my time is valuable, and I will only take a call if they demonstrate serious interest:
If <partner 1>, <partner 2>, or other partner in your firm has a specific interest in accelerated computing or targeted interest in AccelerEyes, I’m happy to take a call to understand their specific thoughts. Otherwise, I’m not interested in a meeting.
Sometimes they do have interest, like this one that I recently spoke with, and there is value in taking a call to learn how these firms are viewing the space.
How do you handle these kinds of inbound investor inquiries?
From the conversation
Comments preserved from the original post.
Kyle Porter
I ask them to sign up for our products and share them on twitter 🙂
melonakos
In reply to an earlier comment
Ha, I imagine doing that in my business wouldn’t go over so well. But I could ask them to provide any ideas they may have for potential customers for our business.