Every day, I get a dozen messages on LinkedIn that say: “Hey Palter – I’m the founder of a great startup building an incredible app and looking for angel investors. Want to see our deck?” Sorry kids (and elderkids), but that isn’t going to work.

Without a doubt, pre-seed is the toughest round of fundraising. Finding investors is challenging and your valuation will be low. If there’s any way you can bootstrap through this stage, do so. If you absolutely need money to build hardware or hire contractors for things you can’t do on your own, raise the bare minimum you need to get to market traction.

Once you have traction with paying customers, it’s easy for investors who know nothing about your business to see the outline of success in the future. Before then, the only thing investors have to go on are your assertions, and unless we know you and understand your industry and your product, those assertions mean nothing no matter how great they sound. Cold outreach to random people who list “investor” in their profile is a waste of time and will only leave you discouraged. To be successful, you need to approach fundraising strategically.

In the same way you target beta customers, you need to target “beta investors” so you don’t waste your time on the 99% of investors who have no interest in your startup. VCs? Nope, not at this stage. (Unless they already know you from your last big exit.) Angels? Nope. Despite the urban myth that angels are sitting around with a big pot of money just waiting for your pitch, angel investors are more conservative than VCs since our investments come straight out of our personal checking accounts. Invest $10K in your startup or take a luxury trip to Italy—hmmm, I know which way my wife is voting.

So who’ll give you the money you need to get off the ground?

First, it’s people who already know you and are part of your personal network. Wait – wasn’t that the friends and family round? The friends and family round were people willing to donate money to your effort just because you’re you. The pre-seed round is people willing to invest in you because they believe you will succeed. This is your extended friends and family. These are your previous bosses and bosses’ bosses that you couldn’t go to before because all you had was an idea. Now that you have a plan and a go-to-market strategy, it’s time to hit your wider connections. These aren’t random people you find on LinkedIn but people who are already part of your network.

The second group of potential investors are people in your industry. When you tell them what you’re working on, they get it immediately. They understand the problem and they want someone to fix it. They understand the product you’re building and get why it’s the right solution. They know your competitors and understand why you’re better. They know the dinosaurs that dominate the industry are too slow to pose a threat. They get all that without a pitch deck. And that’s a key distinction. If they need a pitch deck instead of a 2-sentence explanation, you’re likely wasting your time at this stage.

Ideally they already know you personally, but if not, a simple explanation such as “I was product manager at the X company,” or “I’m a researcher in Dr. Z’s lab” will suffice to explain why you’re the person to build the solution. These people will support you not because they’ve spent weeks doing analysis and concluded that your startup is a better investment than the thousand other pitches they’ve heard this month, but because they live with the problem and desperately want you to solve it.

This group of industry insiders is likely to include potential customers, so this round can do triple duty. It not only gets you the money to complete development, but builds up your list of users and partners once the product is ready, while providing invaluable feedback and guidance from likely customers to build exactly what they need. Include industry experts and thought leaders, too, who can offer a broad perspective on the industry while promoting your solution to customers, industry leaders and investors.

Industry leaders can also introduce to you to the investors who specialize in your industry. But do your own research, identify the early investors in other startups in your space, and find someone to make a personal introduction. Reach out as well to the founders of other successful startups in your industry and try to bring them into your investor and advisor group.

If a cold LinkedIn or email is the only way to reach someone, avoid sending a generic pitch. Explain exactly why you’re reaching out to that person—they were an early investor in X, or you admire what they built at Y, or you saw their presentation at conference Z and would really like their advice. Yeah, that takes a lot more time than spamming a hundred people at once, but I guarantee you’ll get a better response and maybe even find a customer or two along with a few investors.

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