How to Cold Email Investors
When you’re reaching out to an investor for the first time, odds are the first thing you do is hunt down their email address. A tried and true intro method, a cold email is your first opportunity to introduce your company to investors. For most buy-side professionals, an email is the mode of choice for issuers and is usually the first step in a lasting relationship. But before you hit send, there’s a few important things you should do to boost your chances of setting up a meeting. We’ll discuss investor targeting, how to email investors, what to include in your email, and the importance of following up.
About Cold Emailing
In a recent survey of buy-side professionals, we learned that a majority of respondents would prefer to be contacted by email rather than by phone.
With over 42.1% of buy-side respondents indicating a preference for email and another 15.7% with no preference, sending a preliminary email is a no brainer.
How to Find Investor Email Addresses
The most difficult part of the investor outreach process is finding suitable investors to begin with. Ideally, you should have an up to date investor email database that gives you the contact information for various investors in your industry. For example, Irwin’s constantly expanding investor database includes hundreds of thousands contacts and coverage details about the industries they’re invested in. You can search potential investors by location, industry and geographical focus, market cap, style, and by many other factors as well.
A good place to start would be to make an email list of investors who hold positions with your peers. This strategy gives you leverage to use in your email, as you already know that the investor has a stake in your sector.
Writing an Introduction Email to Investors
You only get one chance to make a first impression, so you want to be sure your introductory email hits all the right notes. A strong introductory email has the following qualities:
- Compelling Subject Line
- Clearly Articulated Investment Thesis
- Customized to Each Investor
- Ends with a strong call-to-action
Compelling Subject Line
While investors are certainly open to cold outreach, it’s important to be able to cut through the noise. The most effective way to do this is to ensure that your email has a compelling subject line. You want investors to see the subject and immediately want to see what you have to offer. Avoid being vague or unprofessional.
Here are some examples of what NOT to do:
- ABC Corp Investment Opportunity
- Unique Investment Opportunity
On the other hand, here are some examples of strong subject lines that lead with value:
- ABC Corp Sequential Q/Q Growth of [X]%
- ABC Corp Achieved [X]% of Canadian Retail Market Share
Notice anything these last two subject lines have in common? They all include compelling information right off the bat. Not only is including numbers a good way to stand out in the inbox, these stats also represent value for the investor.
Clearly Articulated Investment Thesis
The body of your email should be short and to the point. Remember, the cold email is an opportunity to set up further discussion, it doesn’t need to be a full pitch. Your email should clearly state who you are, what the investment opportunity is, and include a call to action for next steps. If you like, you can also include a hyperlink to your company’s corporate presentation or a one pager with some key figures.
Your investment thesis should clearly articulate how your company will make the investor money. Your pitch should include context, reasoning, and data to support your proposition. Some examples of this might include positive catalysts in your industry or sharing metrics such as growth rate, EBITDA, acquisitions or macroeconomic factors. If you are undervalued in comparison to your peers, you may even wish to show metrics that explain why your company might be undervalued now, and what is going to happen to close that valuation gap.
Customized to Each Investor
Even if you’re sending email in bulk, you want to be especially sure that your emails are customized to each recipient. Obviously this includes customizing things like the recipient’s name and firm, but your email should also demonstrate that you’re aligned with their investment style. When you’re targeting investors, look for investors who invest in a similar market cap, sector, or geographic area for your company. You will also want to know whether their investment style is focused on growth, value, yield, for example. Be sure to highlight your company’s alignment to their investment strategy in your email.
Furthermore, you should check if you have any mutual relationships with your target investor. Do you have any connections with their colleagues from past work experiences? A shared former employer? Don’t be afraid to name drop or mention any other pertinent information that could pique the investor’s interest.
A Call to Action
After making a case that your company could be a profitable investment, you want to take control of next steps with a clear and compelling call to action. This might be booking a call with management or IR, a company site tour, an in-person meeting, or a webconference. Avoid making the investor book time - you want to make their life as easy as possible. Instead, ask about their availability and set up the appointment for them. The following is an example of a good call to action:
“Are you available for a 30 minute introductory call with our CEO in the next week or two? If you could provide a few times that work for you I can send over an invite”
This call to action states clearly what is being asked (30 minute phone call), a timeframe (within two weeks), and what is needed to get started (a suitable date and time).
The Importance of Following Up
If after a few days you don’t see a response from your prospect, don’t assume that it’s an automatic rejection. Most likely that investor is busy and hasn’t had a chance to respond. If you think there’s a strong fit with their investment style, don’t be afraid to send them a follow up message. A follow up email is fine, but you may also want to try giving them a call in case that’s their preferred method of communication.
We examined a sample of 500 outbound campaigns beginning with a cold email. A single cold email had an average response rate of 2%, but that increased to 18% with up to four follow up emails. When up to four phone calls were added to the cadence, which totalled eight touchpoints over a four week period, the response rate shot up to 42%. This demonstrates how a well timed follow up can make or break your chances of meeting an investor.
Persistence is important, but you also don’t want to spam investors. Wait a few days between follow up messages to increase the likelihood of getting a response.
When it comes to investor relations, email is king. A well written cold email to investors can certainly go a long way in your fundraising strategy. You can download Irwin’s email template in our full Guide to Writing a Successful Investor Email or use the tips in this article to write your cold introduction email to investors.