Angel Investors. Done or Dead.
Most of the dozens of startup people I have dealt with don’t understand how to get investment from angels. StartUps seeking investment are afraid that actually asking for a check will abort the very thing they’re about to request - angel investment . The fear becomes convoluted logic -
- “if I ask then I’ll be perceived negatively”
- “which will disrupt the likelihood of getting the very thing I’m about to request”
- “ergo - I will not ask”
So in a perfect inexperienced catch-22, startUps wait for the potential angel investor to offer to write a check and invest. Now unless you’ve invented sliced bread no one is just hopping up from the desk grabbing the checkbook and writing you a $25k check. So this approach is indeed a loser and a stalemate. You’re waiting for a positive reaction that results in an investment and your angel is identical to someone leaving a movie - satisfied or not - but done.
So how do you get the startUp investment without disrupting the likelihood? Well, you’ve got to change your frame of reference. You’re looking at the problem inverse to the way it really works. Look at it backwards from an assumed NEGATIVE conclusion - you never get that angel investor to write a check. THAT IS NOW FACT retrospectively. Therefore anything you did during your pursuit of investment, staying morally, ethically, and socially within bounds would not have produced the negative outcome. IN FACT reviewed in this simple way EVERYTHING YOU DIDN’T DO is what caused the negative result to occur.
HEY KEEP READING!
So if that’s the case the critical path items to getting any investment, whether from venture capitalists or angel investors, has GOT TO INCLUDE ASKING FOR THE MONEY. NOW! And any investor actually prepared to write a a check can’t be embarrassed or put off by actually being asked. REPEATEDLY. In fact an excellent test of a real startUp investor is ASKING FOR THE MONEY!
I founded three startUps, two with investors. The first startUp I bootstrapped with a partner and sold to ADP who later sold and it was again sold in 2003. The second co-founded with the same partner (acquired by) ate up $15M of investment, most of it from a famous technology billionaire. My third startUp I started alone and was funded in excess of $40M from big time venture capitalists.
YOU’RE ALMOST DONE!
In both investor backed companies Angels provided $1-$2M of investment. Although they were some $100k and even larger investors most were $25-$50k sized. So that’s 30-40 angels raised from per company! And if even 1/2 of the angels I met invested (which is crazy) that’s at least (35 Angels/50% close) * 2 companies = 140 ANGELS! I’ve pitched.I learned early on - they were real distinctions between serious investors and Newbies! And I learned early on - if angels were going to invest than any normal amount of cajoling - direct or indirect - would not sway their belief that they would make money by investing. In other words if they wanted to invest - asking them to or pushing for them to act soon or in a larger amount never derailed the successful outcome.
So - at the end of the day after you’ve done all that’s necessary to get the check - you either get the check or have a dead angel.