Weekly Trivia

Source: Investopedia

Angel Investors

Love ‘em or hate ‘em, angel investors are a massive component to the startup ecosystem. You’ve probably heard the term before - but as a refresher - these are wealthy individuals who write $5k, $25k, $100k, or even upwards of $500k checks to startups.

But here is the brutal part…it’s the wild west. They have their own niches, passions, expertise, check sizes, personalities, requirements and timelines.

So I’m going to share the good, the bad, the ugly and a few funny stories.

Getting Started

Right when Veera and I went full-time, we had recruited 7ish angels, began to organize paperwork, and anticipated a raise of $300k.

This was in 1Q22. Know what happened?

Market crashed, three banks failed, thousands of startups dissolved into thin air, VCs stopped making investments, and what (historically) was the most lucrative time to be a startup, quickly become the worst.

So…the round blew up in our face.

One of those angels stuck with us, but didn’t write their $25k check until 9 months later.

Life comes at you fast in the startup world.

Personalities

Alright, this isn’t a perfect list, but I tried my best to categorize the different type of angels that one might come across.

Shop Talkers

These people likely make $5k - $25k investments from time to time, but they LOVE talking about it. More specifically, having multiple meetings with you, breadcrumbing you along, but really just wanna talk shop.

Wannabes

These people don’t write checks. Ever. But they really wish they could. It’s not because they don’t have the money, these people are just bored, want a feeling of purpose, likely are retired, and want an excuse to dump their “wisdom.”

Professionals

Experienced angel investors cut through the bullsh*t. They will listen to a 30min pitch or look at your deck, and will wire the money immediately. These people know what’s up.

Consultants

I hate these people. They’re the worst. Likely worked at a few startups and maybe a VC fund. Oftentimes they ask for a % cut of the money you raise, make empty promises of sending your deck to their “network,” and even worse, ask for an upfront fee for their “fundraising coaching.”

Kings & Queens

Woof. I hate to admit it, but sometimes angels just want to hear you make the ask. You gotta bend the knee and the wire will come from their family office instantaneously.

Evangelists

These are angels who are picky, but if they choose to invest in your company they will move heaven and earth to make sure everybody knows about it. These people are highly selective, but are great to have in your corner.

A Funny Story

It’s 7:15am, my girlfriend and I just began a 12hr drive when an angel investor called my cell. So I pick it up, groggy eyed, chugging the hot a** coffee next to me, slapped my face a couple of times, and he kicked off the call with “pitch me.”

As I’m pitching him, her cat is meowing like crazy (he hates the car), my girlfriend is trying to calm down the cat, meanwhile I’m dodging morning commuters left and right as we get caught in terrible traffic near Dayton, OH.

Needless to say, it was a hectic environment, I was totally distracted, and multiple times he asked “is everything okay over there?”

Fortunately, I explained the situation and he chuckled a bit, but needless to say he never invested.

Sometimes you just gotta chalk it up as an L.

Lessons learned

These may or may not help, but hopefully I’ve made mistakes so you don’t have to.

• It’s a numbers game; don’t chase or beg.

• Nobody wants to be the first investor, but once that first check clears all the rest will follow.

• Take any meeting you can get, at a minimum you’ll get good practice and feedback.

• Do whatever you can to showcase some sort of ROI, that could be revenue, LOIs, user engagement, an MVP, literally anything that enables an investor to understand how you measure success.

• Just answer their questions, don’t word vomit (I do this allllll the time).

• Don’t sell them on your business today, sell them on what you will be and use your current traction as evidence.

• Don’t be afraid to ask customers to invest, it speaks volume to your product/service and the problem you’re solving.

Fundraising is both thrilling and stressful, but that’s why we often to describe startups as a journey. Thanks for reading, if there are any specific topics you’d like to hear don’t be afraid to shoot me an email ([email protected]).

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If you’re somebody on the sidelines or are not sure if a financial advisor makes sense for you or your family, just shoot me an email at [email protected].

Or… visit our website and book time with us!

Thanks for reading, Habits fam. See you back here next week for more.

-JB