Why Those Warm Intros Are Mostly But Not Completely Useless

Imagine you’re a hotshot venture capitalist and you get this message from one of your buddies:

“Hey DC, sorry I can’t make golf tomorrow. I’ve got a meeting with one of our portfolio companies. They’re absolutely killing it and getting ready to close their next round. Our fund is putting in another $2M. They’re in your space. Want an intro to the founder?”

The answer, of course, is, “Hell yes! Tell me more.”

That’s a hot intro. If you can get intros like that, you’ll close your round in days.

Now imagine the following email hits your inbox:

“Hey DC. You don’t remember me, but we’re connected on LinkedIn. I’d like to introduce you to LMNOP, a SaaS startup for language learning. You can read their 3 paragraph description below. Would you like an introduction to the founder?”

Sorry, Charlie, that “warm intro” goes into the bitbucket.

It fact, that warm intro from a contact is worse than a cold intro from the founder. If she’d reached out to me personally with a good story about why I’d be interested in what they’re doing (based on what I personally invest in, not just the usual spam), I’d be more interested in taking a look at it.

In the middle is something a little warmer — an intro from someone I actually know, reaching out to me personally because they think this startup is something I’d truly be interested in.

In that case, I’ll take a closer look at the deck and perhaps even set up a zoom with the founder. Still, that won’t make any difference in whether I’ll invest or not since all investments go through the same application process.

So that warm intro might get you a connection and perhaps a bit of useful feedback, but won’t help much in landing an investment.

The Investor’s Inbox

As an angel investor and startup mentor, my email, LinkedIn, and Slack messages are overflowing with requests from startups for warm introductions to VC firms. Meanwhile, as an active angel investor, random people are reaching out to introduce me to startups they have some association with.

There’s a pervasive belief among founders that finding investors is about having the right connections, and investors only seriously look at pitches that come from warm introductions.

The truth is more complicated, but in general, at the pre-seed/seed stage and even into Series A, warm intros are neither necessary nor particularly useful, so there’s no need to waste time on them. Hot intros, though, are a different story, so founders should rethink their investor outreach strategy.

The Warm Intro

As an angel investor for over a decade and a member of the executive committee of Tech Coast Angels, I’m reasonably well connected to the venture capital world. As a startup mentor at a bunch of accelerators, I’m often asked to provide an introduction to some particular venture firm on the founder’s hit list.

Inevitably, it’s someone I met for a second at a conference long ago, or I liked something they posted on LinkedIn so I reached out to connect. In other words, I don’t really know them, and more importantly, they don’t recognize me.

So despite being connected on LinkedIn, when I duly reach out to Ms. Venture Partner, 9 times out of 10, I don’t get a response. The rare time I do hear back, it’s a polite recommendation that they fill out an application on the website.

Sorry, I’m not much help.

In fact, if done right, the founder is more likely to get a response from Ms. Venture Partner than I will.

If you craft a personalized message about why she’s the one person in the world who’s the ideal fit for your startup (and not generic blah, blah, blah about your wonderful startup), there’s a chance you’ll get a response. But that’s a message from the founder to a specific person, not something I can pass along as an intermediary unless I have a true connection with both the company and investor.

But even scoring that direct connection to a partner at a venture firm is unlikely to help much, and an associate even less. If you don’t have a scalable opportunity and a professional quality deck, if you haven’t met the required milestones, an intro isn’t going to bring an investment. If the startup is the right fit at the right stage with the right story for the right VC, an application via the website without a referral will stand out and get attention.

Whether you come in via a warm intro or not, the application has to go through the same process of evaluation, diligence, and fund vote. Building a connection to one partner or associate can’t hurt, but won’t help much either.

Meanwhile, the venture funds make it easy to apply online — they really want you to apply. It’s not just window dressing. They want deal flow. They want to find that nugget of gold, that diamond in the rough, that needle in the haystack to invest in. They pay a team of associates to review every application panning for gold.

If you get a rejection or no response at all from your application, it’s not because it was ignored. It’s because it wasn’t a good fit for what the firm invests in. Sorry.

So instead of wasting time looking for warm intros to short-circuit the application process, use the time to hone the pitch or reach the milestones needed to make the company a more attractive investment.

Can I Help You Get Funded By My Investment Groups?

Whether a founder reaches out to me directly, or has a contact send a recommendation, unless it’s someone I really know, my response will be the same: check our group’s investment criteria on our website and if it seems like a good fit, submit the application online.

Even if I think the startup is perfect for our group, in the end the process is the same. They’ll have to fill out the online application to enter their information into our system, go through a review by the pre-screening committee, do a pitch in front of the full group, and go through an extensive diligence process before coming to a group vote.

A recommendation from a member is always helpful, but it needs to be based on something more meaningful than a short conversation. If I’ve previously invested, served on the board of directors, or been an advisor to the startup for an extended period to be able to vouch that this the winner we’re looking for, that carries weight with the group. Not a lot, but it helps. Anything less than an extended relationship, though, won’t help at all.

That said, there is a benefit to the warm intro. If I know the person who reached out to me and the startup is in my specialty, as a favor I’ll review the deck and speak with the founder. If it looks like a fit, I’ll provide tips on how to improve the deck and review the group’s process to help prepare. But sorry, there’s no shortcuts to an actual investment process.

What to do instead of warm intros

If you have any hot intros, absolutely take advantage of them. Get your previous round investors to introduce you to their hundred closest friends. (Be sure to keep all your investors in the loop with regular updates so you’re not hitting them up for this favor after they haven’t heard anything for months.)

Get your mentors, advisors, and accelerator leads to introduce you to people they think would be a good fit. Investors are looking for personal recommendations from people they know and trust.

If there are perhaps 5 investors that you’re convinced are absolutely perfect fits to invest in your startup, use your network to try to reach them. Reach out to their portfolio company founders. See if there’s anyone in your network who really knows people there personally, a golfing buddy rather than just a LinkedIn connection. You’ll be lucky to find one or two. Give them a try. Don’t expect much.

And of course, reach out yourself, too, let them know why they’re perfect and why you really want to work with them. And do real research first. Mention the companies in the portfolio, their strategy, and why you’re the perfect fit for them.

Beyond that, don’t waste more time on more warm intros. Instead, spend the time polishing the short description and the pitch deck until it stands out from the crowd. Then apply through the websites. The VCs teams are waiting to review your pitch.

Find out how SüprDüpr raised $500 million from Sam Hill Ventures and Bitecoin Ventures through an introduction from Satoshi Nakamoto in my Silicon Valley mystery novel, To Kill a Unicorn. American Fiction Awards’ Finalist for Best Mystery of 2023.

Get your copy today! 
https://www.amazon.com/Kill-Unicorn-DC-Palter/dp/1950627616