How to prove yourself to investors if you don’t have a track record

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As an investor in early-stage companies at Cocoon Capital, we meet a lot of first-time entrepreneurs who have little work experience.

The main thing we look at is the strength of the founding team. But since most of these startups haven’t generated any revenues yet, we don’t necessarily expect to find a perfect management team. We also look for founders who are passionate about what they do, confident but not arrogant, and can hustle for business and learn. We look for the ability to attract talent and build a strong team.

However, gauging them on these qualities is a challenge when you can’t look at the founders’ past experience.

Getting the conversation right

After only a short period of knowing the team, we must decide whether to invest or not. Sure, reference checks are an option, but in reality founders are never going to give us references that will say anything negative. Also, many founders—especially first-timers—don’t have many relevant references anyway.

So instead, we look at every point of contact in the fundraising process to evaluate the attitude, capabilities, and actions of the founders from the first approach through to the due-diligence process. Every interaction we have with founders tells us something more about them—often hidden in plain sight.

If you are a new founder looking to raise funds, here are some of our top tips at Cocoon Capital that will help you get your investor conversation right.

The first contact

The best approach for first contact is getting a common acquaintance to make an introduction. LinkedIn is an excellent platform to find common contacts. For us, the best introductions come from portfolio entrepreneurs and investors who we have worked with in the past. By taking this approach, you are showing your professionalism and the ability to network and hustle.

The other approach is to send a cold email. This has a lower chance of success, especially if you have spammed emails to all investors you know about. If you can’t find someone who can make an introduction, make sure to personalize the email by saying, “Looking at your website, I know you have invested in X and I think that you will be interested in what I am doing.”

Spam emails are easy to spot and normally demonstrate a lack of professionalism. Obvious signs are phrases like “Dear Sir,” “Hey, dude” (I’m not kidding. Someone once sent me an email with this!), or “Dear Cocoon.”

The first meeting

The most obvious advice is: Turn up on time and be prepared for the meeting. Personalize your presentation and do some research on the investor you are meeting.

We are continually amazed by how many founders turn up to meetings without looking through our website first. We look at the first interaction—indeed at the entire fundraising process—as an indication of how you would deal with potential customers and stakeholders in general.

Summing up