Getting an angel investor meeting is one of the high points of being a founder. After all, tracking down one of these illusive investors can be a serious hassle. But don’t worry — we’ve got you covered on how to find angel investors, how to get an angel investor meetings, and what to do once you’re in the room.
Angel investors are typically high net worth individuals who invest very early into the formation of a new startup company, usually in exchange for convertible debt or equity. The role of angel investors serves as a critical bridge between the startup financing needs of a company and their larger capital needs later on.
If you want to find angel investors that make sense for your deal, the best way to start is to search by the proper criteria. Angel investors, much like venture capital firms, like to find startup and early stage opportunities that existing within areas they are most comfortable making investments.
The more time you spend to help find angel investors that are very well targeted, the more likely you’ll be to get a good response rate.
Angel investors come in lots of flavors. Some are focused on really early stage opportunities when the company is just an idea on the back of a napkin. Others are looking for companies that already have some market traction and have already proven they are on a hot streak. You’ll want to make sure you do as much of your homework as possible to find angel investors that write checks for exactly what you do.
The first place to start is by filtering through the industry or market you currently serve. Generally speaking, angel investors follow particular industries as their first filter. That means if you are looking to find angel investors for a real estate deal, you’re best bet is to filter out those who have no interest in that market. You’d be wasting your time trying to pitch angel investors on an industry they don’t serve.
We like to use “industry” as the first filter, realizing that a particular industry can have lots of “markets” within it. For example, “technology” is a commonly addressed industry among angel investors however there are dozens of individual markets including software, Internet, hardware, and others. Even within those markets they can sub-divide more.
The more specific you can make your search to find angel investors that are a clear fit for your deal the better. Using our search, start filtering by industry and then worry about the rest of the filters later.
After you’ve narrowed your search to find investors by industry, you’ll then want to sort the list by those who are closest to you. You can do this easily by typing in your zip code which will scan the angel investor network for those investors who are in your area.
You’re certainly not limited to talking to local angel investors, but they will most likely be your most likely candidates for capital. Angel investors certainly write checks to companies outside of their region, but it’s less common. They tend to source deals that are close to them where they can meet with the entrepreneur as needed by just hopping in their car.
Some angel investors will have specific local criteria to let you know that they do not invest outside of a particular area. In that case it’s best to spend a little bit of time on their online profile to get a sense for how they work. Your time is as valuable as theirs, so there’s no point in reaching out to people that don’t invest in your area, and chances are you’re not going to relocate to meet their funding criteria (that’s rarely a good idea).
Not every angel investor funds the same size of deals. Some may invest very early on, but only invest up to $25,000 with a single check. This is most common of individual angel investors who are investing personal capital in a very small number of deals.
As you start to move up the chain of angel investors, particularly when you get to pools of capital committed by an angel investor group, you’ll find those that invest up to $2 million of capital, although that tends to be on the very high end. After $2 million you tend to be in the range of what venture capital firms invest, which is a totally different class of investor.
Angel investors don’t typically publish the range in which they invest the way venture capital companies do, so it may be difficult to assess whether the angel investor you’re about to reach out to makes sense for you. In that case it may be possible to do a little research on the portfolio investments they have made to see if they have previously written checks for deals like yours.
Each investment the angel investor has made tells you a lot about their investing preferences not on just funding size, but also on the markets they get excited about. The best thing you can do is reach out to an angel investor with a little inside knowledge and say “I see that you’ve invested in Widget Worx, Inc. - we have an opportunity that serves a similar market that we think you might like.” The more relevant you are, the better off you’ll be.
The final step once you’ve found angel investors that fit your criteria is to figure out how to rank your results. You’ll want to start by contacting your most relevant matches first. And most importantly, you’ll want to take your time in reaching out to them so that you can get some feedback from one before you reach out to another.
We’ve written an entire section on everything from pitching angel investors to the entire angel funding process, so we’d recommend you read that before contacting anyone. But for the time being as you’re doing your angel investor research, you’re best off starting with those that are as close to a fit as possible.
It’s not that hard to figure out how to pitch angel investors properly. Most of it comes down to common sense and just treating angel investors the way you would want to be treated. Despite what you may think, if you want to pitch angel investors you’re not expected to go through some elaborate sales routine. It’s a matter of presenting great information in a compelling way, but doing so honestly and with compassion.
The first thing you’re going to send to angel investors is your elevator pitch.
Your elevator pitch isn’t a sales pitch. It’s a short, well-crafted explanation of the problem you solve, how you solve it, and how big of a market there is for that solution.
That’s it. You don’t need to “sell” the angel investor in the introduction. Your opportunity should speak for itself.
But sending your elevator pitch along with a 20 megabyte PDF document is a surefire way to never even make it past an investor’s spam filters.
Instead, you should send a link to your pitch profile, which is an online profile that explains a little bit about your deal and provides a way for the investor request more information.
When and if the angel investor responds to your email, you’ll either get a short “no” or a request for more information. Most angels will request either an executive summary or a pitch deck, which are pretty similar.
The angel investor isn’t interested in finding out as much information as possible about your deal at this point. In fact, they’re looking to find out a little information about your deal — just enough to determine whether or not they want to spend more time with you.
So don’t inundate the investor with every last piece of information you’ve ever collected for fear of them “not seeing everything.”
They are likely reviewing a dozen other deals at the same time so they couldn’t review your tome of knowledge even if they wanted to (which again, they don’t). Simply let them know that more information is available upon request.
The more traditional request from an investor is to ask for an executive summary. Over the past decade this has become less and less common, with most preferring a pitch deck.
The executive summary is a two to three page synopsis of the business plan that covers things like the problem, solution, market size, competition, management team and financials. It is typically in narrative format and covers a paragraph or two about each section. You can expect the angel investor to jump to the one section he’s most concerned about, read a couple paragraphs, and then maybe look a little deeper. He figures you’ll answer most of these questions in your pitch meeting, so he’s not going to spend too much time on your docs.
A more likely request is that you send over a pitch deck. A pitch deck is essentially your business plan or executive summary spread across 10 to 20 slides in a PowerPoint document. Investors like pitch decks because they force the entrepreneur to be brief, and hopefully use visuals instead of an endless list of bullet points. The pitch deck is your friend and most trusted ally in the angel investor pitch process.
You’ll use it as your main collateral item to get meetings, it will be the focus point of your meetings, and it will be what investors peruse after your meetings.
Check out our rundown of the best pitch decks ever for tips on how to craft your pitch deck.
Once the angel investor has reviewed your materials and determined they are interested in meeting you, you’ll obviously put together a time to go in for a pitch meeting.
Your pitch meeting is more about the investor liking you as a person than it is just pitching your idea. Take a little bit of time to try to establish some rapport. Investors will more often invest in an entrepreneur they like with an idea they have some reservations about than an idea they like and an entrepreneur they think is a jerk.
During the pitch you’ll run through your pitch deck and answer questions. The goal isn’t to get to the end of the pitch deck in 60 minutes or less. The goal should be to find an aspect of the business that the investor actually cares about and zero in on that point.
If the investor wants to spend 60 minutes talking about the first slide, don’t rush them. You don’t get points for presenting the 20th slide.
The goal of your first few meetings isn’t to “close” the angel investor, it’s to establish a relationship that will naturally lead to a close.
The investor isn’t someone looking to buy a car that you have to provide a great deal to.
Be yourself. Represent the opportunity and your passion for business. That is all you need to convince someone to do a deal.