Startup Fundraising: How to Manage Your Investor Pipeline

Managing an investor pipeline is a lot like building a successful sales funnel.

The fundraising process is all about selling. You’re selling your experience, team, and product. Plus, you may be trying to convince an investor that you can generate a significant return on their initial investment.

Sales professionals often start with a large group of prospects and work them through the stages of the funnel: qualifying, nurturing, and eventually converting. In a similar way, many founders reach out to dozens — if not hundreds — of potential investors before they find the right fit for their next round.

In my role at Fidelity Private Shares, I help manage our relationships within the founder, startup, and VC ecosystem. We’re committed to helping founders fine-tune their fundraising strategy. Effectively managing an investor pipeline plays a huge role.

I recently sat down for a webinar with two valuable members of the private company ecosystem:

Christina Pawlikowski, Co-Founder at Copybara, which provides AI-powered copy testing at scale for growth teams; and
Rafael Obando, Head of East Coast, Canada, and LATAM Partnerships at HubSpot for Startups.

Christina and Rafael shared their perspectives and best practices for managing an investor pipeline. Here’s a breakdown of their suggestions below:

7 ways to manage your investor pipeline

Here are seven items for managing your investor pipeline:

Understand the importance of volume
Qualify your potential investors
Engage with investors’ content before reaching out
Tier your investor outreach
Network within your target investors’ portfolios
Batch your meetings
Utilize tools to manage your investor funnel

Let’s explore each a little closer, and provide some commentary from Christina and Rafael:

1. Understand the importance of volume

Christina shared some illuminating numbers about Copybara’s Seed fundraising round. The founding team:

Reached out to 100+ VC firms

Met with 80 of them

Sent documents to 16

Received 7 offers
Agreed to terms with 3 investors

As you can see, volume is important. Striking a deal usually means casting a wide net. The reality is, not every VC will want to invest in your company.

“Know that you're going to get between 90-95% no’s,” Christina said. “It’s not because of you or your business or anything that has to do with you; that's just the nature of the game.”

If a venture capital firm passes on your deal, don’t view it as a failure. Even if you’re not a great fit, that investor might introduce you to another VC that is.

“We've heard stories of investors saying ‘No, I'm not going to sign a check for you – but I am going to introduce you to someone else,’” Rafael added. “So that's a very important factor.”

2. Qualify your potential investors

You should emphasize investor-centric outreach, just as salespeople preach the value of customer-centric communication.

“You need to focus on the needs of investors, their goals, their targets, and how they evaluate investments, “Rafael said. “And this can change based on the type of investor.”

Research any potential investors before you reach out. Do they invest in companies within your stage and industry? Are you a fit for their thesis? Do they already have a competitor of yours in their portfolio? Are there geographic or demographic parameters to consider?

Spend time answering these questions before you send out an inquiry to maximize your efforts.

“Every hour you spend qualifying your investor is going to save you about 10 hours of work in the future,” Rafael added.

3. Engage with investors’ content before reaching out

It’s important to understand your potential investors before you pop up in their email or LinkedIn inbox. What topics do they care about? What big ideas get them excited?

You should follow potential investors on LinkedIn and other socials to start seeing their insights within your feed. Keep a finger on the pulse of what they’re thinking about and what other investments they’re making. If they follow you back, they’ll get to see what you’re all about, as well.

Also, try looking through your investors’ blog posts or thought leadership articles. They might share expert advice and opinions or stories of how they’ve built previous companies.

Look for mutual connection points within their belief system and investment thesis. This will help add depth and personalization to your initial outreach.

4. Tier your investor outreach

Here’s an idea I’m borrowing from Jadyn Bryden, vice president of early-stage VC firm Xfund. Jadyn recently joined us as a panelist for a Fidelity Private Shares event in Boston.

Let’s say you plan to reach out to 100 investors. Maybe you identify 30 investors as your “Tier A”; you absolutely love what they stand for and they’re a dream fit. The next 30 investors on your list are “Tier B”; they resonate with you but it’s not the same “love at first sight” feeling. The other 40 are potentially good fits, but they’re “Tier C” for one reason or another.

(Quick disclaimer: you might find that a Tier C investor ends up being a Tier A once you get to meet them. Very few companies can afford to be extremely picky.)

There’s no need to start your outreach with Tier A. Consider pitching some of the less-than-perfect matches first; this will give you an opportunity to hone your pitch, develop concise answers, and figure out your story.

That way, you can come locked and loaded when you start pitching your Tier A investors.

5. Network within your target investors’ portfolios

Generally, investors love getting introductions from a founder already in their portfolio.

If there’s a VC you’ve really got your eye on, seek out some founders in their portfolio. Try to organically connect with them – perhaps at an industry event. If an appropriate time arises, ask for an investor intro from that founder.

6. Batch your meetings

“One thing that's really helpful is try to batch the process, and run it really tight,” Christina said.

What does batching mean, exactly? You know that to land a deal, you’ll likely have to meet with 50-100 investors. If you have one investor meeting a week, it might take you two years to find the right fit. Not every company has that kind of time!

Batching essentially means booking as many investor meetings as humanly possible within a short time frame (and within reason, of course). This allows you to pour all of your effort into fundraising at one time, which limits constant distractions from building your company and your product. Get into the headspace of fundraising, and go all in.

As Christina pointed out, this also has the added benefit of creating some buzz within the VC community. VCs tend to talk to each other, so meeting with multiple firms in a short time could be a good idea.

“Nothing speeds them up more than feeling like they’re competing with one another,” Christina said.

7. Utilize tools to manage your investor funnel

Rafael mentioned how his company HubSpot offers solutions for startup founders looking to manage their investor pipeline and outreach.

“If it’s like a sales process, why not use a sales tool for it?” Rafael said.

Utilizing a platform such as HubSpot can help you log investor emails, keep track of follow-ups, take notes during calls, and more. If you’re going to reach out to 100+ investors, it might be helpful to consolidate all your outreach in one place.

Beyond these seven ideas, don’t forget some of the basics: sending pre-meeting materials to maximize time, thanking investors after each meeting, and constantly staying in touch via updates or an investor newsletter.

Fidelity Private Shares is here to help as you manage your investor pipeline

Every founder will have their own fundraising journey based on their company and its trajectory. There are many ways to manage your investor pipeline, and we think these best practices will guide you in the right direction.

And if you need some help along the way, Fidelity Private Shares has you covered!

Our equity management platform helps founders raise money and manage due diligence more effectively. Fidelity Private Shares helps you track important documentation, model scenarios, and gain a clear picture of the ownership of your company.

Alongside our product, we offer resources to support founder success, from fundraising strategy to pitch deck reviews to investor introductions.

Join our startup community to see how can help you manage your investor funnel and accelerate your fundraising journey.

The statements and opinions expressed in this article are those of the author. Fidelity Private Shares LLC cannot guarantee the accuracy or completeness of any statements or data.

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