When Founders Need Referrals to Meet Investors, Fix This About Your Startup Ecosystem

In a well-functioning startup ecosystem, founders should know who their potential investors are and how to connect with them. In a supportive startup ecosystem, founders should know how to develop ventures that attract attention, supported by journalists and ecosystem leaders who promote fundable startups, so that investors engage them. Yet, we often see founders struggling to get even a foot in the door with venture capitalists or angel investors, leaning heavily on referrals or “warm introductions” just to pitch their business. For economic development professionals, community builders, startup development organizations, and startup ecosystem leaders, this dependency on referrals is a red flag. It signals that something is amiss—not just with how founders are preparing, but also in how the ecosystem is cultivating relationships and support structures between investors and entrepreneurs.

A Transparent Ecosystem: The Ideal Starting Point

In an effective ecosystem, investors aren’t hidden behind opaque networks, unreachable unless you know someone who knows someone. Instead, they’re visible, active, and engaged with the community, speaking at events, mentoring, and serving as advisors to startup support programs. Angel investors and venture capitalists should be known figures who openly communicate their thesis — their area of interest, the kind of founders they look to invest in, and the qualities they consider most important in a business.

But if founders are left scrambling for introductions, there’s a disconnect in the ecosystem. Either investors aren’t making themselves available and known, the channels promoting founders are underdeveloped, or founders are poorly mentored so as to create ventures that attract attention. The result is a dysfunctional ecosystem where founders are left without essential guidance, and investors risk missing out on viable ventures simply because they lack direct, meaningful connections with the people they’re supposed to support.

Founders Need Education on Building Fundable Ventures

While investors need to make themselves accessible, founders must also be educated on what it means to be “investment-ready.” Many ecosystems fail to adequately mentor founders on the basics of building a venture that’s fundable. Teaching a founder to be “investment-ready” isn’t just about a validated MVP, financial projections, or an idea. It includes comprehensive guidance on how to communicate their vision effectively, market the business (including to investors), and create a story compelling enough to attract attention.

If a startup can’t captivate its customers, it’s unlikely to capture the interest of investors. A founder needs to understand that, in a way, “marketing” for capital is as essential as marketing for customers. Building a venture that attracts capital requires intentional development, clear communication, and a story that conveys not only the founder’s vision but also the tangible growth potential of the business. Unfortunately, many founders stumble here, and ecosystems often miss the opportunity to equip them with these critical skills.

The Referral Trap: A Symptom of Poor Ecosystem Dynamics

When investors rely on warm introductions, it can indicate a deeper issue: that they are either unsure of their investment criteria, unwilling to take an active role in discovering talent, or simply disconnected from the community. Investors who depend on referrals to vet startups are essentially outsourcing their due diligence to others, which is a dangerous approach to finding viable investments.

Reliance on referrals can also suggest that investors may lack a clear network or are ineffective at communicating with the local community. If investors aren’t seen or known, it could mean they aren’t actively networking or establishing a visible presence in the local startup scene. For the ecosystem, this is a sign that community-building efforts must strengthen the bridge between investors and startups. Investors should feel confident and well-prepared to qualify a startup based on transparent and specific criteria, not hearsay.

The Real Cost of Poor Networking and Communication

For founders, failing to prioritize marketing and effective communication is costly. A founder who does not know how to market their startup — especially to potential investors — is unlikely to get very far. Marketing for capital should be as routine as marketing for sales, yet many founders don’t consider networking, relationship-building, and creating engaging content as essential parts of their journey.

We should question why certain “helpful” events and support efforts are so prevalent in the first place.

When we see constant demo days or networking events where founders are asked to pitch to investors, we should ask why those events are even necessary. If the ecosystem were functioning as it should, such events wouldn’t be a primary strategy for connecting founders with capital. The frequency of these pitch events suggests that something’s missing: either the community isn’t adequately supporting its founders, investors aren’t actively engaging, or founders are being misled into thinking these events are the only path to funding. Instead of being genuine opportunities to nurture relationships, these events often serve as Band-Aids over a broken pipeline. When founders are regularly funneled through pitch events, it reveals an ecosystem where investors are on the sidelines, founders lack the education to navigate connections, or both.

In a truly collaborative ecosystem, pitch events should be rare, reserved for showcasing matured relationships and ventures rather than as routine crutches to force connections. A healthy startup environment isn’t defined by how many pitch events or demo days it holds but by how naturally and frequently investors and founders connect outside of these structured arenas.

By addressing this disconnect, ecosystems can shift away from surface-level solutions and work toward a deeper integration, where founders are empowered to reach investors directly and investors are engaged and actively contributing to the ecosystem. This fundamental change benefits everyone and fosters a stronger, more transparent community.

Moving Towards an Open and Functional Ecosystem

For economic developers and community builders, the call to action is clear: Create a culture of openness, mentorship, and accessibility within your startup ecosystem. Here’s what that means in practice:

• Investors as Mentors: Encourage local investors to step into mentorship roles where they can actively guide founders, making themselves known and accessible. Investors who have a hand in shaping the community will naturally gain more confidence in the founders they meet, reducing the need for referrals.
• Startup Education Programs: Develop programs that teach founders not only about pitching and financials but also the fundamentals of marketing themselves and their ventures. These skills are essential for creating an investment-ready business and forming lasting relationships with investors. So much so, I’ll challenge, that of incubators and accelerators that don’t put marketing first – both in what they teach and what they do for founders – you should be working to remove those programs from the ecosystem; it is definitively researched and proven that failed marketing is leading cause of startup failure.
• Clear Communication and Engagement from Investors: Investors should take an active role in communicating their investment theses, providing resources, and attending events. Transparency and active engagement signal to founders that the ecosystem is inclusive and that investors are accessible to those willing to make an effort.

In a thriving startup ecosystem, there’s no need for referral-only introductions to investors, which is not to say they’re bad but rather they’re a leading indicator that your community should be doing something more effectively. Founders and investors should meet at the intersection of transparency, networking, and skill-building. For investors, involvement and clarity of purpose create a more reliable pipeline of opportunities. For founders, prioritizing communication, marketing, and network-building leads to meaningful connections and increases their chances of securing the right investment.

By addressing these gaps, startup ecosystems can create a culture where introductions aren’t necessary, and relationships flourish organically — laying a solid foundation for a supportive, accessible, and thriving community.