In a tech startup, it’s the founder’s prerogative to gain the attention of the industry’s smartest, best connected and wealthiest individuals. After all, these heavy hitters can influence a company’s direction in unimaginable ways. But when you’re a young founder new to the space, making connections and developing meaningful relationships can seem akin to finding that proverbial needle in the entrepreneurial haystack.
However, we’ve found that a great way to gain the attention of potential investors is to do something you probably haven’t thought of: ask them for expert advice.
Over the past year, our company Mhelpdesk has grown from three to 30 employees and has increased our monthly recurring revenue by over $100K. We were able to achieve this growth in part by surrounding ourselves with some of the smartest in the business. We’ve wholeheartedly embraced the saying, “You are only as smart as the people around you.” Asking for advice can be hard; in doing so you expose your company and open the hood to your internal operations, which can make you feel incredibly vulnerable. But the upside to asking genuine questions is definitely worth it.
Here are three approaches that worked for us:
Ask Questions on Their Personal Blogs or Social Channels
In January, I saw on Twitter that a founder of the nation’s leading accelerator was encouraging people to apply to their program in New York City. At the time, we were in a stage of rapid growth where we could likely benefit from the mentorship and exposure — we had just raised our first round of capital. However, it was unclear whether or not this program would be a good mutual fit. Were we too far along with over 20 employees and Series A financing?
But when in doubt: ask. So that’s what I did. I commented on his blog with regards to my concerns and he promptly replied and introduced me to the Program’s Managing Director in NYC. From here, I continued to engage in conversation over phone and email. Fast forward a month and we received an offer to join the program in 2014.
I don’t recommend cold tweeting, commenting or emailing every managing partner in the book. That won’t get you far and will likely come across as a small cry of desperation. This worked because I wasn’t pitching him. Instead, I was genuinely interested in whether or not this program made sense for the both of us — would it be smart to leave our growing company and relocate to NYC for a month?
Turns out it was. And none of this would have occurred without asking.
Ask About Your Metrics
Asking questions about company metrics can also help to gain the attention of a VC.
It’s hard to find a partner at a venture capital firm who really knows about SaaS and SaaS metrics. There seem to be few people who really know what good SaaS metrics look like and how to measure things like magic number, CAC/LTV, churn rate and sales funnel metrics. However, the importance of these metrics is paramount; they can show whether or not you have a unicorn or are just running a business that would fail if you decided to stop selling.
I follow a VC on Twitter who writes an insightful blog all about SaaS. Based on his content, I knew this individual would understand our metrics and our business. So I cold emailed him to introduce myself and get on his radar. He responded, we exchanged a few emails about our metrics, and he even built us a model based on the numbers I provided. Eventually, he informed me that our metrics were extremely strong; we get a 5X ROI on LTV vs CAC and that our sales funnel was in the top 25 percent of software companies. This not only got the VC engaged, but he was now exposed to and interested in the type of numbers we were putting up. We had inadvertently created demand.
Get Help Navigating Deals
Over the last few years we’ve fielded a fair bit of acquisition interest. It’s exciting and humbling, but also critical to make the right choices. To help guide company decisions, we often consult with other successful entrepreneurs and VCs. With their advice we gain perspective, which gives us the ability to make the right decisions. Consulting with mentors, entrepreneurs and VCs about acquisition also legitimizes our business and shows that there is serious interest from major companies.
This also feeds into the art of selling based on the “hope of gain.” Exposing the potential upside of our company makes people want to participate. Typically, after we engage with someone about what to do in a potential acquisition or strategic partnership deal, there is interest to invest or become an adviser. This scenario is a huge win for both sides. The investor sees what you are doing and the demand you’ve created. Inevitably, their interest in your company piques — and so does their interest in a piece of the pie.
We have seen tremendous value by engaging VCs and asking for advice on a variety of topics. Many of these relationships started out with a cold email or tweet. Keeping it short and aiming for real, genuine advice is the key to creating demand and garnering that desired startup attention.
Ryan Shank is the COO of Mhelpdesk, a field service software company that helps small businesses manage their jobs, scheduling and invoices.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.