Quake Capital’s Sumay Parikh Explains The Art Of Writing A Great Cold Email To Investors
At a fireside chat at WeWork Labs 175 Varick Street location, Sumay Parikh, principal at Quake Capital, shared his thoughts on how to write a great cold investor email, why reaching out to your fellow founders is a smart way to get investors’ attention, how VCs vary by region, and why he thinks founders should wait to seek VC funding for as long as they can.
Cold emailing 101
Parikh has had a lot of success with cold emailing investors (remember, VCs have to raise money, too) by following a few simple principles. First, don’t ask for funding—ask the investor to serve as a sounding board, someone you can turn to for advice. He recommends that all startup founders do the same. Use something like “Asking for advice” as your subject line, and “always email the associate or principal, not the GP, who’ll never look at it,” Parikh said. Keep your message short, sweet, and granular. Don’t overwhelm them with a deep dive into your product or tech—state who are you, what your company is building, what you’re disrupting, and what your customers or clients say about you so far. Be optimistic but realistic about where you could go—many investors are turned off by “we’re the next $400 Billion company”-type bravado, said Parikh. Finally, don’t be episodic in your investor outreach, only getting in touch when you need money. Build ongoing relationships with them instead.
How to get investor interest
If you’re targeting a certain VC, consider meeting with other companies they’ve funded and impressing those founders. “VCs get the best deal flows through founders they’ve invested in,” Parikh said.
New York investors aren’t the same as Silicon Valley investors
Investors and the amount of risk they tolerate with their investments varies by region. New York City VCs are often former investment bankers, Parikh explained, and they’re highly data-driven. So if you have 20 million users but no revenue, they may not be the VCs for you. Silicon Valley, however, is generally much more risk tolerant, so having 20 million users but no revenue may not be a problem for investors there. The American midwest, like Utah, Austin, Texas, and Boulder, Colorado, is also becoming a hub for VCs because of the amount of startups coming out of the region.
Take angel funding over VC funding
Parikh recommended avoiding VC funding for as long as you can. “They’ll take your arm, then your leg, then they’ll control your board,” he said. The pros of going with angel funding for as long as you can: less governance and no board. And there are two kinds of angel investors, with different pros and cons. Experienced angels with a track record can offer guidance and help, but they may want to be more involved than you’d like. Angels who are content to give you funding and don’t really care what happens to it (“dumb money” as Parikh called it) won’t be much help with advice and strategy, but they’re also unlikely to take issue with setbacks or financial losses.
Check out this post for more fundraising tips.
This post is based on content from a WeWork Labs programming session.