You’re raising a pre-seed round and you know you need to find angel investors, but how do you find them? It can be really difficult to research angels, understand who is actively investing, and figure out at what stage angels are really looking to invest. This post breaks down all the ways you can seek out angel investors, and what to do once you’ve found them.
First, for all the pre-seed founders reading this, let me just say that fundraising is hard. It’s likely your first time going to investors to ask for money and you probably don’t really know how to do it. You’re going to make mistakes. You’re going to get a lot of “no’s” before you get any “yes’s.” Your pitch deck is going to evolve – you’ll keep iterating as you learn what works and what doesn’t. You’ll learn which common questions investors ask, and how to answer them. It’s a process. Don’t give up.
What are the Different Types of Angel Investors?
Okay, now that we got that out of the way, let’s start with the definition of an angel investor. There are many kinds of angels, but I would characterize them broadly into three groups. You’ll seek out these different types of angels in different ways.
- Active Angels – These are angel investors that look at a lot of startups and write checks often. They may be members of an angel group. They spend a lot of time talking to startups, going to demo days, mentoring at incubators, judging pitch competitions and are highly involved in the startup ecosystem. They can be similar to a micro-VC in their approach in some ways, in that they usually have some sort of diligence process and are looking to build a portfolio. These angels are be the easiest to find as they often market themselves as angels. Note: I put myself in this category.
- High Net Worth Individuals (HNWIs) – These angels have day jobs that take up most of their focus, but they can be involved in the startup ecosystem by mentoring at accelerators, etc. They may not actively seek out deals and spend all their time in the startup ecosystem, but they do invest when something crosses their desk that they like – whether that’s the founder, market or business concept that’s related to their industry. These are the angels that can be harder to seek out as they are not actively marketing themselves as angels.
- Friends & Family – A subset of HNWIs, your friends & family are people in your network that want to support you at the earliest stage of your company. This includes relatives, but also people like your parent’s friends, your dentist, colleagues from previous roles, etc. These are the easiest to find as you know them already.
Okay so now you know what the different types of angels are. How do you find them?
Where to Look for Angel Investors
When you look for angel investors, you’re going to need to cast a wide net. Here are some places to start the search.
- AngelList/Crunchbase – These are the obvious places to start, even though it can be overwhelming to search these huge databases. Just note that many angels aren’t listed, or their profiles may not be fully updated. But it’s definitely worth searching these sorts of platforms, especially to find Active Angels that might be actively investing in your sector.
- Curated Lists of Diverse Investors – If you’re looking for diverse investors, here are a few lists I’ve found (there are probably others, but these are a good place to start):
- US Women Angels, compiled by Lolita Taub
- Diverse Investors List by Founders for Change
- List of Female Angel and Early-Stage Investors in Tech by Mackenzie Burnett
- Angel Groups – There are pros and cons to angel groups (for example, pro: you pitch to a lot of angels at once, con: the diligence process is much slower than for a single angel). My take is that there are some great Active Angels in these groups and it can be worth going through the process to meet them. Some angel groups hold office hours and these are certainly worth going to for feedback, advice and to meet members. Many angel groups list the names of their members on the website. Even if you don’t want to go through the pitch process of the group, you can certainly research their members to see if any might be a fit for your business.
- Your Network of HNWIs – If you are fortunate enough to have a network full of HNWIs, use it! HNWIs can be former colleagues, friends, relatives, your doctors, etc. Think of all the wealthy people you know that are in your network and spread the word that you’re fundraising. Sometimes these checks can be on the smaller side, but as long as they are accredited investors, HNWIs can be a great source of early stage capital.
- Industry Executives – Senior industry executives in your sector may invest in early stage companies. For example, if you’re in the apparel industry, look for senior leaders that have invested in other startups. (e.g., Andrew Rosen at Theory, or senior executives at LVMH, etc.). Cracking this network can take a little bit of effort (LinkedIn is your friend here), but can be really worth it, not just for fundraising. One caveat here: many of these senior executives might be more interested in advising than investing, so be sure to ask them if they are active check writers.
- Later Stage Founders – I’m starting to see more and more that later stage/exited founders are starting to invest at the angel level, particularly on the West Coast. They may invest in a specific industry or more generally, but these sorts of investors are great value-add and it’s worth doing some research (listen to podcasts they’ve been on, Medium posts they’ve written, Twitter, etc.) to see who might be a relevant founder that could invest in your business.
- Your Founder Network – Other founders in your industry sector who have raised pre-seed/seed rounds are in a great position to make intros for you. Most are happy to pay it forward and introduce you to their angels (if there’s a fit) and even others that they have met throughout the years. It’s worth asking your founder friends for intros as angels (myself included) respond very positively to these sorts of introductions.
- Alumni Networks – If you’ve been to college or grad school, don’t forget those networks. And you don’t have to go to a top tier school to be able to leverage alumni networks. Research your school’s alumni database to find people in your industry sector and reach out – a well-written cold email can work really well to get a first meeting or call.
- Accelerators/Incubators – You may have gone through an incubator or accelerator program – if so, definitely use their network to find angels that are right for you. But even if you didn’t go through a particular program (especially a program that is in your industry sector), check out their website for their mentors and advisors. Some, but not all, are likely to be angels that might be a great fit for your startup.
- Early Stage VCs – If you’re meeting with early stage VCs, they may be able to point you to angels that might be relevant for you. If they’re not investing in your company, they may not make an intro to angels, but at least give you names, which is a great place to start. Some VCs host open office hours – take advantage of those to broaden your network and get feedback on who you should be targeting.
- Events – Events, particularly pitch events, demo days or networking events that bring together founders and funders, are a great way to meet angels. They may be speaking at the event, or just attending. While it can feel like there are a million events to attend and they’re very time-consuming, they can be a real source for finding great angel investors (shameless plug: my Retail X Series events are a good place to start).
I Have a List of Angels, Now What?
You’ve gone through all of the sources listed above and found a list of angels you want to target. Next you should create a Google Sheet that can help you track some key information and interactions during the fundraising process. No need to re-invent the wheel and create your own. This version that Jenny Fielding of TechStars has created is great.
Now that you have your spreadsheet, you need to find connections that are willing to make a warm introduction to each of the angels on your list. When you ask someone for a warm intro, make it easy for your introducer. For each warm intro you ask for, customize an email that mentions why you think that angel is a fit for your business, how much you’re raising, a short blurb about your company (include any wins/traction in particular), and a link to your pitch deck (or a pdf of the deck).
If you can’t find a warm intro, you’ll need to craft a fantastic cold email to send – here’s a great thread from Elizabeth Yin of Hustle Fund on how to do that. There are plenty of other posts on how to do this as well. Some angels may not respond to cold emails, but if well-written, many will. This takes time but can be really worth it.
Do’s & Don’ts
At this point, you’ve put together a great list of angels that you’ve researched, and you’ve gotten some meetings on the calendar through warm introductions or cold emails. So let’s go through some quick do’s and don’ts that will help you go from an initial meeting to (hopefully!) a commitment.
- Do send the deck or one-pager in advance of a meeting (yes, I know some people say don’t send a deck, my view is that it’s better to send it).
- Do practice your pitch – especially your short elevator pitch, as well as answers to the tough questions.
- When you get a meeting, do ask the investor if they’d like to go through the deck or have a conversation. If they’ve read the deck in advance, they may want to talk through questions. Don’t assume, just ask.
- In the first meeting, assuming it goes well, do ask the angel if they are actively investing and what their check size is. I’m surprised more founders don’t do this. You don’t want to waste time with investors who aren’t investing right now or have a check size that is not commensurate with your fundraise.
- Do ask if your startup is potentially a fit for that investor – would they like to learn more in another meeting/call, what questions they have, what information they would like.
- If the answer is no, do ask for feedback. You won’t always get it, but when you do, it may be helpful feedback in evolving your pitch.
- Do remember that this is a relationship you’re creating, so it may take several meetings to get the commitment.
- Do use FOMO to your advantage when meeting angels. Once you have some commitments, use those to close angels that you’re talking to. Some examples of ways to create FOMO: a big name that has committed, imminent closing date, only $X remaining in the round, etc.
- Do think of every angel you meet as someone you might have a potential relationship with for 5-10 years. Do you want to be in business with this person for that long? They’re vetting you and your company, but you should also vet them.
- Do ask angels who have committed to your round to introduce you to others who might be interested. Share your Google Sheet and see who they know or can add to the list.
- Don’t ask if the angel will invest in your company in the first minute of the first conversation. This is my biggest pet peeve when I meet with founders – I just met you, how do I know if I’m even interested or know anything about you and your team? Remember that this is about creating a relationship.
- Don’t expect the angel to commit/write a check at the first meeting. Some angels will write a check in the first meeting (you’ve probably heard a story like this from a fellow founder). But most don’t – they need to hear more, get to know you, do some diligence, etc.
- Don’t go to your ideal angel investor first. Meet a few others and practice first. Get a little feedback, get better at the pitch and answering questions, and only then go to your ideal investor so that you’re in the best position to get a “yes” from that investor.
- Don’t try to spend your time turning a “no” into a “yes” in that round. A no is almost always a hard no. However, you can go back to them for future fundraising rounds, particularly if an investor says you’re too early. In that case, find out what stage/metrics they’re looking for and go back when you have them.
- Don’t lie – not about your soft commitments, other investors you’re talking to, or really anything. This should go without saying but when an investor finds out you lied, they will tell their network, and that will torpedo your round.
- Don’t get discouraged – you’ll get a lot of “no’s,” and it will feel like you will never get to a “yes,” but be persistent, keep iterating your pitch, keep working on your business, and you will get there.
I hope this was a helpful guide to think about how to find angel investors and what to do once you find them. Most of the above applies to finding and meeting with VCs as well, but I’ve focused on angels here because pre-seed rounds tend to be angel rounds. If you’re a founder who has had success finding angel investors in ways I haven’t mentioned above, let me know and I’ll add them to the post.
And if you’re looking for further resources on fundraising, you can find a list of articles, investors and more that I’ve put together here.