If your startup is looking for an angel investor, it makes sense to present your plan to flocks of angels, and assume that at least one will swoop down and scoop you up. Or does it? Actually, the challenge is to find the “right” angel investor for you and your situation. Here are some basic principles:
- Angels invest in people, more often than they invest in ideas. That means they need to know you, or someone they trust who does know you (warm introduction). For credibility, they need to know you BEFORE you are asking for money.
- Angel investors are people too. Investors expect you to understand their motivation, respect their time, and show your integrity in all actions. They probably won’t respond well to high-pressure sales tactics, information overload, or bribes.
- Angels like to “touch and feel” their investments, so they are generally only interested in local opportunities. It won’t help your case or your workload to do an email blast and follow-up with 60,000 members around the world.
But now to answer one of the most common questions I get “How do I find angel investors?” With today’s access to Google, it really isn’t that hard. Here are the largest flocks:
- Gust.com. This is perhaps the most reliable source of information on angel investor groups across the world, and the software is used by most of the other angel organizations mentioned below for deal flow. It boasts 595 member-managed groups and VCs, 30,203 investors, and 2,900 new company applications a month. As an entrepreneur, simply enter your location online, and it will list the angel and VC organizations near you. You can then begin your application to one or more of these organizations right on the same screen. As a member of one of these local organizations, I use Gust.com on the investor side to review business plans, deal flow, and help orchestrate presenters at monthly meetings of the local organization.
- Keiretsu Forum. This one claims to be the world’s largest angel investor network, with 850 accredited investor members throughout twenty one chapters on three continents. Since Keiretsu Forum’s founding in 2000, its members have invested over $200M in 260 companies in technology, consumer products, healthcare/life sciences, and real estate. The Founding Chapter is in Silicon Valley, California, (naturally), and I have a connection there if you need a start. A caveat is that this is a for-profit organization, so fees to present may be significant.
- New England Investment Network. This is a series of templated websites for matching angel investors seeking investment opportunities with entrepreneurs seeking capital. The caveat here is that this network doesn’t have a personal touch, as it only facilitates the exchange of contact information, so the matchmaking is left up to you. The reach is very broad, however, with 30 branches worldwide covering over 80 countries in Europe, North America, South America, Africa, Asia and Australasia, and over 120,000 members worldwide.
- Angel Capital Association (ACA). The ACA membership includes more than 150 angel groups and 20 affiliate members from 49 US states and 6 Canadian provinces. These groups represent more than 6,500 angels and are funding approximately 800 new companies each year and managing an ongoing portfolio of more than 5,000 companies throughout North America.
My real message is that the best angel investor you can find is a local high net-worth individual, with whom you or your advisors have an established prior relationship. So get out there and network today, and you can be one of the lucky ones who is touched by an angel without having to go through hell first.