What I Learned After Cold Emailing 187 VCs About Warm Introductions

Published on
April 17th, 2019
"I had to know what it felt like to send a cold email to a VC. Does it just get sent into a void? Was there a way to break through?"
Now, this may age me a little bit, but I remember when venture capital was a much crazier, more impulsive world. Back when I first started learning more about the subject matter in the late 90s, the perception I had was one not unlike the trading floor of the stock market.
I was wrong, of course, but the dot-com boom, and its subsequent changes, still paint a picture that is a stark contrast to what we have today.
Previously, it was more akin to that of a land grab — all you had to do was gather your flag(s) and stake your claim.
Money was flowing quickly into funds, and because of the growth occurring in the tech landscape, it was not uncommon for VCs to put significantly riskier bets with less diligence.
Pre-market, pre-revenue? No problem.
Little to no experience in new technology? Well, who does!?
Unproven market? That’s a first mover advantage.
Enter massive tax cuts in 1997, which reduced the tax on capital gains below the tax on dividends, allowed the deployment of even more money into the investment ecosystem as a whole.
Companies like Apple and Microsoft were growing the user base of personal computers and the venture capital world knew that this exponential technology would create roads paved in gold — and they weren’t wrong.
Ten Internet IPOs in 1995 turned into 18 in 1996, 15 in 1997, and 40 in 1998.
In 1999 there were 272.
Even in 2000, there were 148, despite the stock market crash of March of that year. In 2001, there was an intersection of three major highways: the tech bubble bursting, the impact of 9/11 and the economic downfall. Because of this, reality finally began sank in and there were only six Internet IPOs.
The next I remember when came in 2006. Confidence was coming back, even though it was short lived.
Unbeknownst to many venture capitalists, the housing market and impending economic crash was going to force a massive pivot in how rich people stopped spreading their long-term holdings around.
For better or worse, since these two events, it has never been the same. We’ve seen a fairly substantial shift in how many venture capitalists do business — but in a word: conservative.
Because of this, every time I hear the word “bubble” now, I’m a bit skeptical. We heard it as recently as 2015, and it never came.

The Rise of the Warm Introduction

So then picture for a moment that you’re an investor. Every day, hundreds of people come to you with this new <thing> that could potentially change the world and manage a large return. But these people are naturally an optimistic bunch and sales is the language of the land. What’s more, you’re only one person, so there is no way you could stay up-to-date on every possible macro and micro trend of technology and identify the needle from the haystack.
So who do you turn to?
First: trusted colleagues.
Second: experts in their respective field.
Third: internal and external scouts that make recommendations.
Queue the majestic Goodwill Hunting-esque music: “John… You have to meet this kid, he really has something”.
Thus, the old axiom your network is your net worth rings true once again. But what networks do young people in their early 20s have? More often than not, whatever network their parents have or whomever they’ve managed to connect with socially — while balancing school, life and growing a startup.
But where does that leave certain types of entrepreneurs? Not everyone is extroverted or charismatic. Some have a fear of public speaking. Some just are absolutely unlikable. Does that make them bad at growing companies? Not always. It was reported time and time again that Steve Jobs consistently belittled, berated and condescended others (in public).
I’ve often noticed that many of these entrepreneurs are still great at growing companies but hit roadblocks when it comes to socialization. Venture capitalists who invest in the most silver-tongued entrepreneurs should expect nothing less when it comes time to report their growth and progress.

A Hypothetical Solution

Over the past several months, my team has been building a tool called VentuRank. The assumption was simple — after enough conversations with VCs, I knew that data visualization and customization could potentially (a) give some of the types of entrepreneurs I spoke of earlier a better chance at making a good first impression and (b) provide venture capitalists with a rapid way to determine whether or not a startup was a good fit.
The software calculates startups based on portfolio interests. Filling out an application is generally the end of the line. But what if a VC could tell our software what they’re into, just once, and startups could tell our software what they have and it measures how closely they align? Would VCs be into it?

Examining My Inquiry

For both curiosity and product market fit, I had many more questions and no answers. A bit of background: for those that don’t know me, the majority of my career has been working with venture capitalists, and growing the companies they’ve funded, and I still couldn’t tell you the general consensus of the crowd on this subject. Here were some of the most notable things I wanted to figure out:
1. How much cold deal flow do VCs receive on a daily basis (emails, contact forms, etc) and how do they go about evaluating them (or not)?
2. Do they consider these cold emails an important metric to the health of their firm/ deal flow and what tools do they use currently?
3. Do venture capitalists consider cold deal flow proprietary?
4. When VCs talk about deal flow, in general, are most of them referring to warm introductions only?
5. Given the flood of emails they get on a daily basis, how difficult is it for someone to make cold contact with a VC and get a response of any kind?
6. Do they see any value in their cold deal flow whatsoever?
7. Have they invested in any startups that have contacted them cold?
8. Does cold deal flow get thrown away because of this sentiment:
“ If you can’t get a warm introduction to a VC then how on Earth are you going to be successful?”
Or because of this one:
“90% of our cold deal flow is garbage so it's not worth our time to find the other 10%.”

Identifying Targets

As I mentioned earlier, I’ve spent a lot of time around venture capitalists — so I wanted to go outside of my circles. Fortunately for me, there are tons of databases out there with venture capital email lists (below), and tons more for those who have access to, let’s call them, private online networking groups.
Even better, I came across several services where you can just simply click a button and fire off your business plan to every. single. venture capitalist on the planet.
No wonder they get so much cold email…
Services like these answered one of the questions I had in mind above:
“Do venture capitalists consider cold deal flow proprietary?”
But I wasn’t sure if this just answered it for me personally, or if it also answered it for them. Meaning, how proprietary can cold deal flow really be if someone can easily send an email to every VC in the world?
So, instead of using one of these services myself, I decided to compartmentalize my list. Here were my personal criteria:
  • I didn’t want my findings to have any bias. So I immediately focused on venture capitalists that I’ve never directly worked with before, or directly worked with one of their portfolio companies (which was actually fairly difficult for someone who has consulted about 230 Series A startups in his past — not including the 150 or so through mentorship in incubators/accelerators). This actually pared down my list fairly significantly.
  • A wide spread of portfolio interests including different stages, technology preferences, markets, revenue metrics, etc..
  • Egos aside — people who haven’t heard of me. (Although I have zero way of knowing one way or another, this was just preferable — as I’m aware everyone has the Googles).
  • A wide spread of locations, specifically both inside and outside of the technology startup hubs.
  • A wide spread of perceptions on this matter, i.e. venture capitalists that have publicly stated that they only accept warm introductions and some that didn’t mind the startup reaching out to them directly.

Outreach

Once I had my list of targets, I assembled a survey. I also delivered it through HubSpot in order to detect open rates. My initial hope at this point would be that this email worked as a surrogate of sorts to what an entrepreneur could expect when doing cold emailing themselves.
I also wanted to know if venture capitalists actually read their contact us pages, so I decided to sprinkle a bit of my outreach through this methodology as well.
For most people, the hard part might have been making this campaign enough of a success to make the knowledge worth it from a data perspective.
However, most people aren’t growth hackers who have a breadth of experience in best practices on how to write cold emails that convert. Nowadays there are tons of guides on this practice itself, so I won’t go into detail here, but… game recognize game, alright?
It’s probably worth noting, however, that even as good as I’ve been at this in the past, it was immediately clear that this crowd’s defenses were already ready for me.
But what did I decide to do in this situation?
Walk right up to the biggest elephant in the room and punch him in the trunk.
I had to know what it felt like to send a cold email to a VC. Does it just get sent into a void? Was there a way to break through?

The Emails

Test A
Subject Line: “Research”
Body: “Hi <name>. I put together a survey about cold/warm introductions in the VC industry. Your 5 mins would really help me out. I’ll share the final data results with you. Cool?
— Anthony
Hypothesis:
1. Short and sweet, because VCs get walls of text on the regular.
2. Familiarity, because who would write a note like this unless they know someone?
TEST B
Subject Line: “Feedback. Not seeking funding.”
Body: “Hi <name>. I’m sure you get emails all the time from people asking you to look at their startup. This is one of those emails, but we’re interested in your input as a potential feedback source, not an investor.
We’re building a software tool for analyzing a VCs cold deal flow. Interested in being part of our focus group?
— Anthony W. Richardson
Hypothesis:
1. Maybe VCs are so used to emails about investment this one would stand out.
2. Maybe understanding the startup world would help them see that I’m doing product-market fit and be willing to lend a hand.
Note: I was wrong on both of these, but more on that below.

Completion Results

The first email I sent out was TEST A. I delivered to 10 people and I actually got two back. Not the best, but I kind of figured I could do better.
The second email I sent out was TEST B. I delivered to 10 people and got zero. Okay, moving forward.
Trying different times of day was up next. A career as a growth marketer taught me, when in doubt, email them about 30 minutes before you think they go to bed. Who doesn’t look at their phone before they go to bed or first thing when they wake up?
Fired off another set of 20 and got… 4 responses. 3 from A and 1 from B.
Better than the first group. Let’s try one more test. Weekends.
20 and got… 4 responses. All of them from A.
I’m about a third through my list and my batting average isn’t terrible.
Okay. I’m totally fine with this if it’s repeatable.
And it to my surprise, it was.

Findings

After re-sending my unopened emails and the “share this with a friend” button at the bottom of the survey, I ended up with about 65 responses.
And because I don’t want to break confidences, I won’t be sharing the exact data. But here is the summary bullets of what I can tell you based on the responses I received.
Note: Which is an important distinction for data integrity, mind you. We must assume that those who did respond already had a higher probability of being responsive to cold emails from others. However, as I mentioned in the above, I did test two separate groups based on their viewpoints on this subject matter and saw no correlations.
Here are the core findings from the respondents:
  • A venture capitalist receives 6200 emails per month, on average. This number significantly increases based on the size and prominence of their fund / personal brand.
  • Most venture capitalists affirm cold deal flow is important.
  • Most venture capitalists consider cold deal flow an important metric to the overall health and awareness of their firm.
  • However, contrary to the above — the strong majority of venture capitalists report they do not look into any the details of the startups that are cold emailing them.
  • The primary reason for not evaluating cold deal flow is (according to them) they simply get far too many startups reaching out to them to evaluate them all and,
  • the strong majority of startups that reach out don’t fit within their portfolio interests AND/OR are poor candidates in general.
  • They also report that in the event they have evaluated cold deal flow startups, the time involved has routinely not been worth the time invested in the exercise.
  • They also report that the times they DO look into a startup that has cold emailed them, they’ve already heard about them from somewhere else (press, word of mouth, etc..).
  • They also report that when there is a startup they have heard about that they’re interested in, they may occasionally check their cold deal flow to see if they have already been contacted by said startup. Think: Searching Gmail for “Uber” after they’ve read an article about Uber.
  • Finally, the well-known quote “if a startup can’t find a warm introduction… how should I expect them to be successful” is actually NOT a belief of most venture capitalists (according to them).
  • However, there were a few and the strong majority of those few were venture capitalists at very prestigious, well-known firms.

Conclusion

This exercise has provided some great insight into the questions I had above. Most notably the reasons why warm introductions have become favored. The most direct answer to that is: noise.
Noise, in this case, can be defined as too many startups, too many bad startups and too many startups that aren’t doing their homework when it comes to reaching out.
After learning all of this, how would I go about cold-emailing a VC at this point? Fairly simple.
If you can send this email honestly, it could be your best bet: “Hi Mary. I read over your portfolio interests and researched the companies that you’ve invested in previously, and believe we may be a good fit.”
To have an even better chance? Fingers crossed we get VentuRank up and running soon enough and the VC you want to work with is using it.
Instead of the above email, every startup gets a score based on what they’re looking for. If it matches, our hope is it will catch their eye much more than any email you could ever send.
Pssst: Beta sign-ups are now live on ProductHunt
Published on
April 17th, 2019
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