investor communications theory

Startups have it all wrong when it comes to dealing with investors. Investor communications is the new theory to raising startup funding. The common anecdote of communicating with investors during the MVP-traction stage, or afterwards.

A simpler analogy, think of an investor more like an insurance broker; or a bank – checking off a list to see if a particular startup ticks all the boxes … a general analysis looks something like this:

Traction – check.

Team – check.

Sales – check.

Due diligence – question mark.

Martin Zwilling reported on that: “The key theme for a successful due diligence is full disclosure and no surprises before or after the commitment.” I think of due diligence more like a process of checking ‘are these guys legit.’

Startups should start to build out relationships early with investors, more often than not – this begins at the MVP stage. This is dead wrong, and I’ll explain this in more detail. Read on.


Startup Monopoly Investor Psychology: On the other side of the table, startups are trying to tick all of these boxes. This might sound silly, BUT this is what usually occurs. It’s kind of like an investment job interview. Startups are playing the board game ‘monopoly’ with investors – and, investors are playing investors and startups.

This goes for three reasons:

1) Investors can play the investment game with other investors.

2) Investors can play the investment game against other investors.

3) Investors play startups by waiting.

Typically, an investor is looking for a startup with at least a MVP and some traction. After, investors will consider other things like team, sales, TAM, IP, product differentiation etc.

Put these entire factors aside, Investors are really just looking for the next big thing. It’s a game and startups must step up a notch to be considered.


The MVP Traction Investment Fallacy (MTIF): I’m sure you have heard someone say something along these lines: ‘build a MVP, get traction then raise funding.’ Well … I’ve heard this expression countless times. It’s so ingrained in startup culture that it’s considered hands-down to be the only accepted route to take. The problem with this is – its just ‘theory.’

“Theory may be defined as a proposed explanation whose status is still conjectural and subject to experimentation, in contrast to well-established propositions that are regarded as reporting matters of actual fact.” (

The true nature of theory is that it’s the current accepted rule, until proven otherwise. There are some key ingredients missing with the current startup investors landscape MVP Traction Investment that I’ll explain later.

A lot of people in the startup world are more like startup monkeys. Repeat certain given rules and speak these rules like MVP-Traction-Investment advice to others’ as if it were their own. The fundamental flaw with this approach, rarely does it lead to any improvements on existing rules.

Many sheep, few leaders so to speak – we need more leaders.

Reminds me of the social media guru phase. Social media experts popped up left, right and center. The same thing occurred with The Lean Startup – lean experts are everywhere. To increase thought-led discussion on pre-existing ideas, we all need to be proactive – be abstract from fear or criticism – rather than just being so-called gurus, utilizing others’ thoughts as our own.

What needs to change? Start being open and transparent about what you are doing – this includes founders, accelerators, investors and college professors.


The Investment Game Has Changed: To make things even more complicated for startups looking to raise funding – the investor landscape has changed. And … will continue to change. Here’s what’s happening right now:

Startups have more access to information, which has created a better pool of talent. As a result, investors expect more. It’s not just startups that have more access to info – both investors and accelerators benefit as well, raising the startup bar.

Ten years ago, for a startup to raise funding pre-product (MVP) could be considered perfectly acceptable. By today’s standards it’s not OK unless you already have had a successful track record. Investors want more proof and this is a perfectly reasonable request.


The nativity of startups: A lot of newbie startups follow the MVP path, build a MVP, try to get some traction & then approach investors with their pitch. Why? This is what they have been taught to do.

It can take up to 6 months for an investor to start even considering to fund your startup. Then, you have to wait for things like terms and due diligence to go through (which can add more time).

This is why a lot of startups can be naïve. They have been led to believe that once you have a MVP you can raise funding. It doesn’t work like this

This does not even factor in, if you are fundable or how long it will take to find the appropriate investors that might be interested in your product or service. Not to mention, your runway (how long your startup can last before it runs out of money). Startups rely too much on the hands down approach of talking to investors at their MVP stage.

This puts startups in quite a predicament; they are contacting investors around the MVP Traction stage. To combat this, startups should be adaptive and focus on early communication with investors.

Sam Altman from Y Combinator mentions that startups should focus on various stages at different points in time:


1) The Team Stage.

2) The Product Stage.

3) The Funding Stage.

4) The Growth Stage.

5) The Hiring Stage.


Clear strategies as to what you want to achieve at different stages of your startup are definitely important for focus, you cannot manage everything right form the start.

An extra stage should be added into this mix – I call it “The Investor Communication Stage.”


The Investor Communication Stage: As soon as a startup has an idea that they have committed to pursuing, start reaching out to investors right away.

You can do this even with just a simple landing page. With shushnote, I actually set up a meeting the next day with an investor. All within 24 hours of when I first had the original idea. Before I had even created our name.

It’s important to reach out to investors that might be interested in you. Make a list of startups that you would like to partner with. Then, research, which investors funded these companies; and reach out to them with a short simple email like this:


Hi Name,

I just wanted to introduce what we are doing. At (startup name), we do XYZ.

In the future, we are interested in partnering with (startup name) which I happened to notice is in your portfolio.

I know, this is early days for us – we are not seeking funding just yet. It might be in your interest to keep an eye on us.

P.S. I didn’t go through the normal route of getting an introduction as we share plenty of connections – I know you will check up on us.


Your Name



The main goal of this email is to create investor awareness. Make them aware of what you are doing and why they should care about you. Every day, investors get bombarded with a lot of pitches.

This email is different, it’s not ‘asking for an investment’ or for feedback – it’s simply introducing your startup and you in a friendly way pointing out that it might be interesting for them to keep an eye on you. Build rapport early and get on their radar.

By using this approach, drop investors a short tip about your progress or any press mentions every now and again to keep communications open. Aside from reaching out to investors early – do the same thing with marketing.


Tips from Laura Cain, Associate at Thomvest Ventures for cold emailing via Quora:

  1. Email analysts / associates. Partners don’t dedicate as much time to sourcing and are less open to leads outside their network.
  2. Target VCs that have a shown interest in your space – don’t make the email sound like a blast; tailor it to the VC based on their investment thesis and portfolio companies.
  3. Outline exactly what you do, how much traction you have, and what you are trying to raise … in bullet form.
  4. This may sound tacky, but if you have interest from notable investors, I would list them. Knowing a firm we respect is looking at the deal will undoubtedly make us more interested.
  5. Attach a brieft deck.

Key Takeaways:

Reaching out to investors early helps you for a variety of reasons. You can get feedback on your product, increase awareness about what you are doing and most importantly, start to develop relationships early with investors.

If investors are constantly hearing about you in the news, have been following your blog posts and asking their friends about you – this will put you in a better position when you are at the stage to raise funding.

You do not need to wait until you are MVP-ready or have gained traction to start talking to investors. This is a common misconception.

Ultimately, the best way to get in touch with investors is through an introduction.

Questions: What are your thoughts? Should startups talk to investors in the early beginning; or wait until they have a MVP and traction? Do you have any insight to share that others’ might be able to benefit from?

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