By Michael Quigley, Director of Research, LSN
As an entrepreneur in the midst of a fundraising campaign and all that it entails—networking events, conferences, referrals, and cold calls—you are going to meet with a substantial number of people who are either potential investors in your technology or who could connect you with someone who is. Following up with these new contacts after an initial meeting or conversation can make or break your campaign. Here are some key reasons why following up is so crucial and what it can do for your campaign.
It Shows Professionalism
By taking the time to send follow-up messages to recent contacts, you are demonstrating your aptitude and professionalism as an entrepreneur. You are going to be managing potentially hundreds of relationships, and most people you speak to will be aware of that. So taking the time to send a personalized follow-up message in a timely manner shows your level of organization. This ultimately reflects positively on your investment opportunity. With investors viewing management as one of the most crucial pieces of any early stage life science investment, you need to do whatever you can to demonstrate you are on top of things.
It Creates a Dialogue That Fosters a Relationship, Which in Turn Can Elicit an Allocation
The goal of your fundraising campaign is not only to get cash but also to find the right partners to help you grow your business. Therefore, whenever you’re meeting with new investors or other strategic partners, you should keep in mind that you are here to establish a professional relationship. Even investors who are not a fit for your opportunity today may be interested in speaking with you down the road as you hit certain milestones, or they may be able to refer you to other investors they know who might be interested. By maintaining a dialogue with these groups, you can leverage your network to gain more contacts, as well as stay on their radar for when you reach those milestones and are looking to raise an additional round.
It Can Clarify Any Potential Miscommunication
By following up and mentioning some of the specifics from your conversation, you can bring to light any miscommunication between you and the person that you met. Whether clarifying the next steps in the evaluation process, the information they need to see from your firm, why they can’t invest at present, or who they would like to put you in touch with, by sending that follow-up message you help make sure that nothing falls through the cracks.
Now that we’ve discussed the reasons why follow-up is so important, here are some best practices for how go about following up after an initial meeting.
How you follow-up should depend largely on your current relationship, their level of interest in your opportunity, and where your conversation left off. For investors that have clearly stated a high interest, you want to follow up with haste. Ideally, you should be trying to set up a time for a follow-up call toward the end of the original conversation, if possible. If not, an email including your investor deck and proposing a call should be sent no later than the following day. If they are interested, they will be glad you have shown this initiative and will coordinate a time for further discussion.
If the investor seems interested but not highly compelled to fund your opportunity, it is wise to follow up periodically. By checking in from time to time, you remain on their radar for both referrals and a potential investment as you obtain more supporting data. Also, it is always a great idea to ask if they will be in your area or going to any conferences that you will also be attending so that you may meet in person. Face-to-face meetings are always the most valuable and could turn a mild interest to a more serious interest.
If the investor is not interested due to your level of clinical data, then it is wise to continually follow up with them as you obtain more data, even if is still under the level they are looking for. By keeping them abreast to your companies’ successes, the investor will grow more familiar with your technology, which may make them more likely to allocate down the road.
In cases where the investor is not interested in your opportunity due to the indication you are targeting or the underlying science behind your technology, then following up should be limited to a simple email thanking them for their time. In a best case scenario, they will refer you to someone they know that may be interested, but other than a single email, following up with these investors will only slow you down. This is why you should always try to identify the reasons behind an investor’s lack of interest; this information will help you better understand how to tweak your marketing materials as well as how you should or shouldn’t be following up.
Keeping track of all of these contacts as more surface and current contacts go cold can be a daunting task if not managed properly. Using client relationship management software can make this process much easier, however, it still requires a diligent effort if you wish to get maximum utility out of all the meetings you have.