With over 950 million members, including 65 million business decision-makers, LinkedIn is much more than the professional network it originally set out to be. When used wisely, the platform can be a phenomenal fundraising tool.
At Mindset, we communicate daily with both startup founders and investors, who have shared with us that LinkedIn is one of the key tools they utilize to stand out from competitors, expand their reach, and position themselves adequately to achieve their goals.
Why startups should use LinkedIn for fundraising
Social media platforms, especially those that have a decluttered user interface and a seamless navigation experience, help investors access information in a more efficient, structured way. Almost 80% of institutional investors like pension funds, banks, hedge funds, insurance companies, VC funds and others use social media as part of their regular workflow. From these networks, LinkedIn is the platform of choice, being used by 48% of them.
In order to identify suitable investment opportunities, conducting in-depth research is key. This is why 59% of investors allocate between 15 and 30 minutes to peruse a single piece of content, whether that is an article, a report, or a different form of information.
Additionally, 64% of investors have reported using LinkedIn to get in touch with a company’s executive management, and, in a remarkable testament to its power, rated LinkedIn above long-established media like the Financial Times, Bloomberg, and fellow social platform Twitter.
Two fundamentals to start fundraising on LinkedIn
While the statistics above reinforce the importance of LinkedIn as a fundraising platform, jumping aboard the bandwagon too soon can quickly backfire if you have not done enough preparation. Therefore, there are two critical steps that you need to follow prior to delving into the network for fundraising endeavors.
- Optimize your profile: Your LinkedIn profile serves as your virtual introduction. Hence, treat it as such. Ensure it features a polished avatar image, and that it boasts comprehensive details about your professional journey and a compelling self-description that inspires people to learn more about you. Remember that, if you make contact with an investor, they will likely scout your profile, and that first impression will have an impact on their decision.
- Create value by posting content and engaging: Just having a LinkedIn profile for the sake of having it is not enough. To really capitalize on the advantages of being on LinkedIn, actively engage by posting regular updates, putting your achievements in the spotlight, and so on. Talk about your mission, team, unique value proposition, and those aspects that set your venture apart from the competition. Use the platform to share with the world your unique expertise and knowledge.
Three strategies to leverage LinkedIn for fundraising
Now that your profile is set, and you are an active, contributing member of the LinkedIn community, here are three strategies in which you can leverage the platform to accomplish your fundraising goals.
#1: The three-way handshake: Use LinkedIn as an extensive address book
As we discussed, LinkedIn is more than a professional network. And for you, it can be an address book that expands, and that leads you exactly to the right people. To use it effectively, you can start by leveraging your mutual connections. Check out who you have on your network, and what connections they might have with potential investors. A referral can go a long way, so reach out to these shared contacts and ask for an introduction to those whom you are interested in connecting with.
Also, take a proactive approach, and pay attention to what individuals that you want to connect with are doing. Study what they like, what they comment on, and what they share. Who do they engage with frequently? What topics do they seem more interested in? Then, you can craft a strategy to connect with them. Also, by engaging, your chances of getting a warm introduction skyrocket.
#2: Actively engage with your target contacts
There is an art to building relationships and connecting with investors on LinkedIn.
First, get started by following those investors who spark your interest. Actively interact with their posts, whether it is by sharing, liking, or thoughtfully commenting. At the same time, another viable strategy is to tag someone in a post. However, ensure that what you are posting is high-quality, and that it is relevant to the person that you are tagging. For example, one of our startup clients successfully connected with a VC fund by creating a ranking of the top 5 VC funds’ websites, and tagging the firm in a post. This ignited a positive interaction, and set a positive initial stage for further communication.
Second, to grow your visibility, expand your network. By doing so, your posts will reach a broader audience. This also improves your chances of appearing in recommendations and search results for relevant keywords and tags. In addition to this, you can connect with executives from your preferred investors’ portfolio companies, and engage with them. This will considerably boost your visibility.
Last, but not least, join industry-specific LinkedIn groups. There are several communities like “Entrepreneurs Meet Investors,” “Private Equity, M&A, and Venture Capital Investments,” and “Investment, Innovation, Entrepreneurship,” all of which provide incredible opportunities to connect with more investors and fellow entrepreneurs.
#3: Take the first step, and initiate a direct conversation
Once you’re connected with those that you are interested in, take the initiative and start a conversation. While there is no one-size-fits-all approach, you can increase your odds of an initial successful interaction by taking time to learn more about the person you’re contacting. LinkedIn offers very valuable insights for building better relationships.
After you have enough information to make the first move, craft a custom note. Send a personalized message that references common interests or connections. LinkedIn is full of people sending automated messages, so, if you highlight something you share in common with your prospective investor, you will likely receive a warmer response.
Another thing that helps is being direct while staying true to yourself and keeping your authenticity. While some experts advise against pitching directly, others have found great success in doing so. For example, Darren Marble, co-founder and CEO of Issuance, shared a LinkedIn message which he sent to investors, and resulted in at least 50 calls in a period of three months, with new people expressing interest on an ongoing basis.
If you opt to take this route, follow the relevant business communication etiquette. Include a brief self-introduction, be clear about what you are looking for, and be politely persistent if you don’t get an initial response, maintaining utmost professionalism in all of your interactions.
LinkedIn is an extraordinarily powerful tool for startup fundraising. By following the strategies outlined above–expanding your network, engaging with them, and taking the first step by initiating direct, personalized conversations–you can unleash the full potential of this platform to boost your fundraising efforts, and forge authentic, long-lasting connections that can fuel your startup to success.