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How to Find and Close Angel Investors from a Standing Start

David Beisel
October 5, 2016 · 6  min.

Whether an entrepreneur is raising a smaller (pre-)seed round entirely from individuals or she has a seed-stage or larger VC firm involved in (leading) the seed syndicate, it’s somewhere between necessary and optimal to have multiple individual angel investors involved.

First and foremost, angels can provide capital. But secondly, the can play a strategic role in everything from optics (signaling “smart money” is involved) to connections to tangible, operational help.

The key to all fundraising is to find true believers, not convince the skeptics. That’s especially true for angels.

All investors — including institutional, professional venture investors — make decisions with their hearts and not their heads. Again, that’s especially true for angels. At times, this is because an individual’s motivations aren’t entirely financial, but additionally, as a non-institution, they are quite literally always personal. A personal decision is an emotional one by definition. For entrepreneurs, recognizing this fundamental fact helps empower you to run a systematic fundraising process for individual investors.

Building on this insight, I’ve attempted here to break down a successful angel fundraising process into three stages:


Step 1: Identify (Create A People-Affinity List)

The foundation of your process is an exhaustive list of all the people both in your network and outside it that might have an interest in what you’re building. This is not just a list of “potential investors” (although it includes them), but all of the people who you believe either (1) will want to be helpful to YOU as you’re creating the business and the round, and (2) will be intrigued by the venture itself for a specific reason you can articulate.

The goal here is to think broadly at first by answering the question, “Who will feel an affinity for me and my company?”

If the goal is to appeal to angel investors’ hearts, it’s natural to appeal to affinity, which is defined as “a spontaneous or natural liking or sympathy for someone or something” or “a similarity of characteristics suggesting a relationship, especially a resemblance in structure.” So ask yourself: Who will naturally like you or what you’re doing or will see similarities between themselves/their experiences and you/yours?

To catalyze your brainstorming, here are a few places to start building your list:

  • Friends and family. Starting with friends and family sounds obvious and cliché, but they are the people with the most affinity for you. But don’t just stop at nuclear family or close friends. What about the second cousin who is a startup lawyer? Or your parents’ friend of the family who runs a tech consulting practice?
  • Affinity by personal background. The clear path here is to approach alumni from your alma mater(s). Many schools have their own entrepreneur organizations (that’s from my alma mater, Duke) and some even have their own angel funds which invest in alumni. But you should also push yourself beyond that linear path. What other groups are you involved in both professionally and socially? How else are you able to systematically identify people who have a shared past set of experiences? Include those outside your own age range. Extend this list to not just people you know but people who you can reach or where your story would resonate if it’s a cold outreach (more on that below).
  • Affinity by industry. The more verticalized your startup’s offering, especially if the venture is B2B, the more opportunity there is to identify industry insiders who will care about your company. Beyond (potential) customers, publicly visible analysts, and consultants, consider placing industry leaders who are a “reach” on your list.
  • Affinity by function. Marketing people love to swim with other marketing gurus. Software developers like to spend time with like-minded developers. As a founder, if you have a power alley in a specific functional role or the startup itself will strike a chord with people in that functional specialty, look to add prominent thinkers (especially local ones) in that space to the affinity list.
  • Affinity by degrees. Others who can be helpful on an angel fundraising quest are fellow entrepreneurs and other investors. Founder peers of yours who have gone through this process recently can be a wealth of information, advice, and investor ideas and referrals. And if you happen to know professional investors who aren’t a fit right now (like a GP at a buyout firm or an associate at healthcare life science VC), chances are they know other investors who are a fit for what you’re building.
  • Go beyond. There are a number of publicly available investor lists by deal volume and prominence. As a VC myself, at a New York- and Boston-focused firm, I frequently point entrepreneurs to the same resources. These include the top investor list on AngelList in Boston and NYC, as well as media-produced roundups like Business Insider’s and AlleyWatch’s. Your goal isn’t to simply copy/paste the entire set of names but rather rigorously examine their backgrounds and past investments for details that “rhyme” with your startup.

Step 2: Approach With A Strategy

If done right, the resulting list should be dozens and dozens of angel investors listed (if not 100+), alongside any potential referrals to them. The next step is then to prioritize and customize your outreach.

This stage is an art more than a science. First of all, the goal is to think about narrowing the time spent on outreach by goal. If the goal is to round out your seed round and the emphasis is really on capital, perhaps go broad in your outreach to get more angels in your process. If it’s more about reaching a smaller list of highly strategic angels for whatever purpose (expertise, optics, etc.), then really tailor your outreach to each individual.

Second, think about the likelihood of reaching them. If you already know the individual, it’s easier of course: Just reach out to ask to meet to share your story. The next best approach is to receive an introduction from someone who knows the person on your target list. I’ve found that a super “warm” referral isn’t always necessary; often just any referral is good enough.

Lastly, assuming the first step was an exhaustive one, there should be a meaningful number of individuals where you just have to reach out cold via email. That’s okay, as long as you tailor the message so it’s clear that it’s specifically for them and not a template. The yield for replies will certainly be lower than warmer contacts, but I’ve seen relentlessly hungry founders cold approach and close significant amounts of angel capital as a result of brute force hustle.

The goal of each outreach should be different depending on the individual’s role in the ecosystem, initial disposition to invest or even help, and their (transparent) history of angel investing.

The old adage here is particularly true: Ask for advice, you’ll receive money; Ask for money, you’ll likely receive advice.

The exception to this type of advice-centric angel outreach is, I believe, the clearly “serial” angel investors out there. For them, it’s likely to require more of a formal pitch.

But for others on the list, you need to evangelize. Share your startup’s insight, story, and vision, and then ask for ONE introduction to someone else who can be helpful. (It’s NOT necessary to ask for a potential investor name). The result will be a meandering journey to find folks where your startup not only resonates but strikes a chord so deep that they proactively want to invest because you’ve tugged on their heartstrings.


Step 3: Close While Looking At The Clock

One of the main challenges with some individual angel investors is that they have a tendency to spin your wheels. “Homework assignments,” financial modeling exercises, or most frequently, just multiple meetings without a clear agenda. If the talk is about a potentially large check (whatever that would be on a relative basis) or if you feel the investor can be truly impactful to your business beyond the capital, my general rule of thumb would be to hold two or three meetings. If after that an angel is not convinced, you’re better off finding other true believers, because at this point, it’s veering into the realm of trying to convince a skeptic, wasting precious time and energy.

The fact remains that fundraising goes slowly … until it goes fast.

In the initial stages, making Step 2 lead into Step 3 will feel like a lot of work without much yield. Then something will click. Once the first and second commitment comes along, you can use that confidence booster and validation to begin to press others in the pipeline.

It’s also worth noting the “magic graph” of fundraising — i.e., the ratio of effort to incremental capital raised. (I’ve blogged about that ratio and how to avoid wasting your time fundraising here.). So if you act like fundraising is about the last few seconds of a game before the buzzer sounds, this will force you to prioritize where you spend your time more effectively and work efficiently towards closing.

The above suggestions are just that – a rough guide. The context of your company and the individuals you reach are paramount. The one takeaway I can share with certainty is that the search for angels shouldn’t be a narrow and haphazard effort concentrating on purely financial motives and outcomes. Instead, finding and closing angel investors must be a deliberate and broad appeal with a story that finds specific individuals who believe quickly based on gut instinct.



David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist.