I'm the founder of a $60 million VC fund. Here are 3 important steps you need to take to cold pitch an investor to fund your startup.

Yubo RuanYubo Ruan.

• Yubo Ruan is the founder and general partner of 8 Decimal Capital.
• Ruan says although most of the founders he backs are from referrals, he considers candidates who send good cold emails, pinpoint a big issue, and demonstrate how they plan to fix it succinctly.
• He says it's more important for nascent startups to find a good investor who can help them overcome hurdles than it is to get a lot more capital.
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Though venture capitalists are investing almost $75 billion a quarter into startups, most founders still have a rough time raising money, particularly if they don't belong to the right communities.

So what if you're a talented first-time founder who didn't graduate from a top-tier university or work at Google or Facebook before starting your company? Can you still raise a solid round from world-class investors? Absolutely, but you need to play your cards right.

I'm the founder and general partner of 8 Decimal Capital, a venture firm that currently manages over $60 million. Though our firm primarily meets with founders introduced to us by our portfolio companies, we do occasionally chat with founders who get in touch through cold email.

Being successful in such a scenario generally relies on two critical steps: nailing the initial outreach and then establishing credibility in that meeting - all in an incredibly short timespan.

After sitting down and thinking about some of the best cold emails I've received over the years and the best pitches that followed, I want to share three ways founders have stood out in the past.

1. Craft a short, engaging email that addresses 7 key points

The best cold emails I've received, in the shortest way possible, leave a strong impression that the sender is articulate and has a standout team that's the perfect fit to solve a given problem. They also leave me wanting to learn more.

Most cold emails I respond to are around five to 10 lines long and include the following:

1. A common touchpoint: Did we go to the same event? Did we attend the same undergrad program? Did we work at the same company? Is there anything we have in common that could boost your chances of instantly grabbing my attention?
2. Your expertise: Have you started other companies before? Are you a researcher that has domain expertise that nobody else does? What makes you uniquely qualified to run this venture?
3. Your team: Who's working with you? What is their expertise? Why are they uniquely qualified to be a part of and grow your company?
4. What your company is: What's your one-line pitch for what you're doing and why it's important?
5. Why you're a unique solution: Why are you the best company to tackle the problem?
6. Traction in numbers: Talk about the numbers that matter the most, like user growth, retention/churn, customer acquisition cost/life-time value, or time spent on your app. Leave out stuff like "culture" and other metrics that aren't easily measurable.
7. Flexibility: Don't ask for a meeting right away. Be flexible: Let the investor ask you questions if they'd like to. If they want to meet you right away, that's awesome.

For instance, I was recently approached by an undergraduate venture capital group's sourcing team. Here's what made their email compelling to me:

1. A common touchpoint: The representative talked about its early-stage focus and specifically connected it with 8 Decimal's early-stage focus. This quickly made clear to me that their due diligence work could actually benefit our firm.
2. Their expertise: The email specifically mentioned that the venture capital group works with about 30 venture firms and angels, described three deals it sourced that match 8 Decimal's thesis, and said it had sourced over 100 companies for investors.
3. Their team: The email mentioned that the group is managed by students at a single world-renowned university - and lists testimonials given by two venture capitalists that endorse the team.
4. What their company is: "Our sourcing team finds promising early-stage startups at [prestigious school 1] and [prestigious school 2], and connects them with compatible investors from our exclusive partner network," they wrote.
5. Why they're unique: It was heavily implied that this undergraduate venture firm is the only one at this particular school.
6. Traction in numbers: The venture capital group has sourced over 100 deals for about 30 investors.
7. Flexibility: The last line of the email was, "If you may be interested in partnering with us as an investor, I'd enjoy providing additional information about the programs and [organization]'s mission," which is pretty open-ended and not demanding.

2. Spend more time proving the problem before moving on to your solution

The vast majority of pitches tend to involve founders starting with a short explanation of a problem, usually less than 5% of the pitch, and then going on to explain how their companies hope to solve it. The issue is that these pitches often don't focus enough on explaining why it matters to solve said problem.

We haven't been convinced that it matters to solve the problem before founders go on to their solutions; consequently, the rest of the conversation ends up building on faulty groundwork.

Instead, the best pitches I've heard tend to follow this kind of format:

1. Open with what the problem is and spend a fair amount of time (closer to 15 to 20% of your pitch) explaining what the consequences would be of not solving the problem.
2. Follow up with a hypothetical solution to solve that problem.
3. Explain why your company is positioned to be that solution.

Here's an example: When one of our most successful fintech investments pitched us, the founders spent a significant portion at the start of their pitch going into the nitty-gritty of all the hoops banking customers needed to go through while sending money internationally.

They talked specifically about the number of business days these transfers generally took, fees, and more - all of which were helpful in getting my partners and I interested in the space before we had even heard anything about the team's product.

We even felt some level of frustration having faced this very problem ourselves and experiencing how tough it was to use other solutions in this market.

The company then went on to talk about a couple of existing solutions, but went particularly deep into the idea that it could be a great use case of blockchain technology. (Again, they spent a considerable amount of time convincing us this was true before introducing their solution).

Once the founders proved the problem and the hypothetical solution, they shared their product features, growth metrics, team track record, and more than convinced me and my partners that this was the right team and company to tackle the problem.

3. Explain why the investor you're pitching is a good strategic fit

Particularly at the earliest stages, a lot of founders tend to feel like if they raise a round that the capital will help them overcome their most critical challenges. In my experience, however, capital can only actually solve a minority of early-stage challenges.

What founders usually need more than venture capital in the early days is the right investor to help them overcome hurdles like acquiring the first enterprise customers or hiring top talent.

However, founders often neglect to explain why the partner or firm they're pitching is a good strategic fit, which, from an investor's point of view, is actually incredibly important.

At 8 Decimal, some of the deals we got the most excited about touched these three areas of a strategic fit in their pitches:

1. The investor has previously built a company in your space. His or her experience would help you "look around the corner."
2. The firm is well connected with certain types of talent - maybe engineers or marketers currently working at top companies, perhaps formerly in their portfolio - that you might not otherwise be able to hire.
3. Your offering can help a large portion of the fund's portfolio companies cut costs, increase revenue, or improve productivity. (This strategy can be especially helpful if the fund has a very specific investment thesis; their portfolio companies can likely become your first customers and you'll be solving a portfolio-wide problem.)

So before every pitch, ask yourself: "Every firm has money. Why this one?" And utilize your answer to guide the conversation.

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