The Most Underrated Way To Convince Investors — Backchanneling

During a raise, you'll almost certainly speak directly with any investor who puts significant capital into your startup. But even if you hit on each of the many things that investors are looking for these conversations don't always address every concern an investor might have.

And even if an investor feels good about the deal, they'll want to gather opinions from people in their network either about you from mutual connections or from experts in your space that they know before writing a check.

Most founders think that there's nothing they can do at this stage and that once they've had the pitch meeting, they need to simply play a waiting game.

This is not the case. The best founders I know continue working on getting the investment by backchanneling.

What is Backchanneling?

Backchanneling is the conversations that investors have with other people about your startup that take place outside of formal meetings.

Investors rely on trusted opinions, either from mutual connections who know you better than they do, or industry experts they know, to help them de-risk the investment. Ideally, you have mutual connections reach out on your behalf to highlight why you as a founder and your startup are worth investing in.

Think about the diligence process like a reference check when you're applying for a job. You want to make sure your best references are included, so that you have the best chance of getting the job.

The exact same thing is true with your raise. Backchanneling, when done right, can significantly impact whether an investor backs your startup or not.

How to Backchannel Effectively

I get a lot of requests to backchannel on behalf of founders. There are good requests and bad requests. All good requests have a couple things in common:

First, they come from founders I have a personal relationship with. This removes the chance of any awkwardness. Anyone who backchannels for you is spending some of their social capital to help you. Don't ask someone to do this if you don't have a relationship with them and/or you don't know if they believe in what you're working on.

Second, the founder includes context on how the investor meeting went, especially flagging any concerns the investor may have expressed. This helps the person you're asking to backchannel understand the investor's mindset. Otherwise, they'll be flying blind, which would decrease the chance of the message they send making an actual impact. You want them to be able to directly address the concerns that the investor may have.

Lastly, the founder also includes at least one specific thing they would like me to highlight to the investor. This doesn't necessarily mean I will include it, I need to genuinely believe in it as well, but it's helpful and makes it easier for me to write a more detailed message.

When to Backchannel

The best founders start backchanneling even before they're raising by building authentic relationships with others in their space.

It's one thing for an investor to get an email from a contact saying they think you're building something interesting. Their recommendation jumps to a whole other level if that same email says they think you're building something interesting and you're the right founder to make it happen.

More tactically, once you have a meeting scheduled with an investor, scan through the following lists to identify potential backchannels:

• Mutual connections on LinkedIn

• People they follow on Twitter who you know personally

• Founders they've invested in who are in your space

Then, reach out to a few of your strongest connections from those lists right after you meet with the investor.

Remember, the next meeting is never guaranteed. You may need multiple rounds of backchanneling but don't hold out assuming that you'll make it to the next stage.