How To Find Investors Through Referrals
At Localvest, we believe the best way to find investors is through referrals. Here are a few tips to help you better understand the referral process and how you can supercharge your referral efforts.
What is a referral?
If you are a business or “Issuer” looking to raise capital , a referral is when one investor recommends your deal to another investor based upon the relationship you’ve established with them and, more importantly, the confidence and trust they’ve established in you and your deal. A referral can act as an endorsement or validation. If an investor refers your deal to another investor in their network, they are indicating that they trust you and believe in the reliability and potential of your deal.
Why are referrals important?
Referrals establish an issuer’s credibility and build a foundation of trust. Operating on the principle that money moves at the speed of trust, referrals have the potential to help issuers raise capital faster. From an investor’s perspective, referrals shine a spotlight on individuals and investment opportunities, helping them discover new opportunities and diversify their portfolio. Crucially, referrals signal to an investor that an issuer can be trusted. If investors know they can trust an issuer, they are not only more likely to invest, they are also more likely to refer the issuer to other investors in their network.
As an issuer, how do I cultivate referrals?
The best way to cultivate referrals is to build trust and strengthen relationships you have with existing investors and individuals in your network who can connect you with investors. This may sound obvious, but it cannot be overstated. Build trust with investors by treating them well, keeping them up to date, following up on your promises to them, and maintaining good communication. This creates a space where referrals can happen. When you establish genuine connections with investors, they’re more likely to talk to other investors about you and make a referral.
It’s also important to identify individuals in your network who can connect you to investors. For example, your law firm, accountant firm or consultants who work with you closely and know you and your business are a good position to make an introduction to a potential investor. If you have a good relationship with them, they might be willing to provide an introduction that could lead to a meeting and open up an opportunity for you to pitch your deal. In this example, even if your deal isn’t a good fit, these venture capitalists or angel investors might know someone for whom your deal might be more appropriate and could refer you to them. Don’t view these introductions solely as pitch opportunities, but as opportunities to make connections and establish trust.
How can I supercharge my referral efforts?
There are many ways you can supercharge your referral efforts.
- Share your deal
Say goodbye to clunky PowerPoint presentations and share your deal in a way that is quick for an investor to view and easy for them to understand. This demonstrates you respect an investor’s most valuable resource: time. For example, if you’re fundraising under rule 506(c), you can share your deal on social media.
- Expose your connections with other investors
Make it easy for potential investors to see and find out who has already invested in your deal. This demonstrates you’ve built trust with other investors and generates conversation that may lead to greater interest in your deal.
- Join Localvest
Our platform makes it easy for you to share your deal in a way that is easy for investors to read and understand and easy for you to update. Additionally, with SmartShare™ you will be able to share your deal with all of your contacts in a security-compliant manner. Once your deal has been shared, Localvest will track the view, clicks, and engagement activities of your deal. This will allow you to understand who is viewing your deal and what elements of your deal are driving engagement. Investors will also be able to see who is following your deal and who has invested in your deal, which could lead to more referrals.
Are you ready to supercharge your referral efforts?
Explore our website or contact us to learn how Localvest can help you to succeed.