{"id":32312,"date":"2018-06-27T09:31:58","date_gmt":"2018-06-27T01:31:58","guid":{"rendered":"http:\/\/www.upgrademag.com\/web\/?p=32312"},"modified":"2018-06-27T09:32:40","modified_gmt":"2018-06-27T01:32:40","slug":"considerations-when-pitching-to-angel-investors","status":"publish","type":"post","link":"http:\/\/www.upgrademag.com\/web\/2018\/06\/27\/considerations-when-pitching-to-angel-investors\/","title":{"rendered":"Considerations when pitching to angel investors"},"content":{"rendered":"
\"\"<\/a>

IMAGE PROVIDED BY DATA DRIVEN INVESTOR<\/em><\/p><\/div>\n

By \u00a0Data Driven Investor<\/strong><\/em><\/p>\n

An entrepreneur trying to map out the funding landscape today will find a much more complicated environment than existed just a decade ago.<\/strong><\/p>\n

You used to jump from a friends and family round to a Series A investment.\u00a0 Then Series A became harder to get for early stage companies so \u201cseed\u201d investment firms emerged to fill that gap.\u00a0 Now you see \u201cmicro-seed\u201d investment firms filling the gap that seed investors have more recently left open!<\/p>\n

For early stage investors, there has always been the option to avoid the \u201cinvestment firm\u201d altogether and\u00a0try to raise funding from angel investors<\/a>.\u00a0 For the purposes of this post, I consider angel investors to be people investing their own money rather than someone else\u2019s, and I\u2019m not considering those very (very) few angels that are professional investors, investing using the same model as an investment firm would.<\/p>\n

I was asked the other day if I had a pitch deck designed for such an angel investor. My answer was that it depends on the type of angel investor you\u2019re pitching to.<\/p>\n

Angel investors are basically people with lots of money. They either made it or inherited it.\u00a0 You can slice and dice angel investors by the size of check they write, or by the industry they have the most experience in.\u00a0I think about categorizing angels by how they got their money.<\/p>\n

Here are some (not comprehensive) examples of angels categorized by how they got their money.<\/p>\n

1. Made Lots of Money because of Deep Technical Expertise<\/b><\/p>\n

The Technical Angel is normally going to spend a lot of your time together asking questions about<\/p>\n

\u2022the technical differentiation between your product and other products like yours,<\/p>\n

\u2022what you are doing from a design and technical perspective that will drive your users to adopt your product.<\/p>\n

Technical experts have gone through the challenges of having to build products that people don\u2019t adopt. If they\u2019re good at what they do \/ did, they\u2019ll have learned to stay away from founders who aren\u2019t as attuned to the importance of designing adoption-driving techniques into their products.<\/p>\n

Some technical experts may have also learned the hard way that building something that isn\u2019t highly differentiated technically might still get you customers, but might not get your company acquired.\u00a0 Since all angels are investing for an eventual exit, these angels are going to steer clear of non-differentiated technology.<\/p>\n

2. Made Lots of Money because of Deep Marketing Expertise<\/b><\/p>\n

The Marketing Angel is going to test you on how you\u2019ll get past your early adopters and get enough visibility to drive growth. They will drill down into your go-to-market strategy to see if you understand how to build a realistic one.<\/p>\n

If you\u2019re pitching a B2B business, you\u2019d better be pitching to a B2B Marketing Angel.\u00a0 If it\u2019s a B2C business, pitch it to a B2C Marketing Angel.\u00a0While B2B and B2C businesses are different for a lot of reasons, how you market your product has got to be one of the biggest differences between the two models.<\/p>\n

3. Made Lots of Money because of Deep Sales Expertise<\/b><\/p>\n

The Sales Angel is going to dig into your growth model in a different way from the Marketing Angel.\u00a0She\u2019ll see if you really understand<\/p>\n

\u2022Who the buyer of your product is, and how you know they will buy;<\/p>\n

\u2022Where the budget for buying your product will come from;<\/p>\n

\u2022What your sales cycle is, or is likely to be (if you haven\u2019t sold much yet);<\/p>\n

\u2022What your sales model is and why you chose that model over other options.<\/p>\n

Like all angels, the Sales Angel cares about all aspects of your business plan.\u00a0 It\u2019s just that they are likely to dig deeper into your sales strategy than the other types of angels.<\/p>\n

\u00a0<\/span>4. Made Lots of Money because of Other Deep Expertise<\/b><\/p>\n

By this point, you\u2019ve figured out that the angel\u2019s background is going to dictate which topic they are likely to spend most of their conversation with you.<\/p>\n

The challenge for you as an entrepreneur is two-fold:<\/p>\n

First, you need to be enough of an expert across the different functions to be able to intelligently speak to the area that the angel is most likely to go deep on. If you\u2019re a serial entrepreneur, you have already figured this out.\u00a0 If not, then you get to this point by talking to lots of experts and getting their advice before you head out for funding.<\/p>\n

Second, you need to be a strong listener to be able to hear where each particular angel investor is driving the discussion and then going there rather than trying to pull them back to your pre-prepared deck.<\/p>\n

All the concerns described by my hypothetical experts above are valid.\u00a0 Meeting with angels of different backgrounds turns out to be a great way to test your overall business strategy and get great feedback on areas you need to think through in more detail.<\/p>\n

But if you\u2019re also trying to get funded by them, not just get advice from them, then you also need to tune your pitch to their particular areas of focus.<\/p>\n

There\u2019s one other angel type out there that I haven\u2019t yet mentioned.<\/i><\/p>\n

5. Made Lots of Money but no particular area of deep expertise<\/b><\/p>\n

These are guys (mostly guys) that have been in the right company at the right time and came out with millions without the years of hard work it takes others to get there, or sometimes the people who have family money.<\/p>\n

Taking money from any angel investor comes with its own set of burdens, but doubly so from the Non-Expert Angel.<\/p>\n

Some angels might invest in you and leave you alone to run your business except when you call them for advice.\u00a0 But many angels will want to be frequently updated on how your business is going.\u00a0This kind of angel can take up a lot of your time, especially if growth is slower than they expected.\u00a0 In some cases, their interest in your business is invaluable because of the advice they can provide.\u00a0 In other cases, I\u2019ve seen angel investors become as distracting and annoying to an entrepreneur as a back-seat driver.<\/p>\n

So if you end up taking this advice and find yourself lucky enough to have a number of angels\u00a0interested in investing in your company<\/a>, take the next step and think about which of those angels are most likely to help you, rather than distract you, from growing your business.<\/p>\n","protected":false},"excerpt":{"rendered":"

By \u00a0Data Driven Investor An entrepreneur trying to map out the funding landscape today will find a much more complicated environment than existed just a decade ago. You used to jump from a friends and family round to a Series A investment.\u00a0 Then Series A became harder to get for early stage companies so \u201cseed\u201d […]<\/p>\n","protected":false},"author":7,"featured_media":32313,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,26,25],"tags":[6145,6146,799],"class_list":["post-32312","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-headlines","category-opinions","category-software","tag-angel-investor","tag-data-driven-investor","tag-startup"],"_links":{"self":[{"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/posts\/32312","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/comments?post=32312"}],"version-history":[{"count":0,"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/posts\/32312\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/media\/32313"}],"wp:attachment":[{"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/media?parent=32312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/categories?post=32312"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.upgrademag.com\/web\/wp-json\/wp\/v2\/tags?post=32312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}