How to Impress Angel Investors and Make It into “Startup Heaven” 40

Tip from BplansGot a question for one of the angel investors mentioned below? Skip ahead and leave it in the comments. Today is Ask an Angel day! Don’t forget to share the feedback on Twitter using #AngelTip as your hashtag.

How to impress angels

Tips from real angel investors about how to impress them and stand out from the crowd

Before I jump in and share the secrets of how to impress angel investors, I should tell you what an angel investor is, and how they differ from venture capitalists.

An angel investor is a high net worth individual who invests their own money into startup companies in the hopes of gaining a return on their money. Many angels are entrepreneurs themselves, or executives and business or community leaders. Wikipedia defines an angel investor as “an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.”

How Angels Invest

Angel investors can invest individually, or as part of an angel investor group. Angels come in all shapes and sizes—from newbies to seasoned investors—and they invest anywhere from very small increments of $5000 (this is more typical of an angel group who pulls their funds to create a larger investment—like $300,000—that goes into one company after the group votes) up to much larger amounts, like $1 to 2 million dollars per deal. The type of deals and industries they invest in, the company stages, and the amount they invest depends on the individual or angel group.

I have pitched to hundreds of angel investors over the years as a result of co-founding two tech companies and raising just shy of $1M in angel capital. I was the CEO of both startups, so it was my job to pitch to the angels. My favorite part of pitching to them was the due diligence process. If you’re lucky, and an angel’s (investors or groups) interest is piqued by your initial short pitch, they will want to schedule more time with you to get to know you and your team, and to dig deeper into your business plan (i.e. what’s behind your financials, your go-to-market strategy, your current traction in the marketplace, your competition and why you’re better, your intellectual property or “secret sauce,” your exit strategy, etc.).

I also learned quickly that no two angels are alike. What one angel likes another may not care about. For example, one of the angels I pitched to cared deeply about our competitive landscape, whereas another wasn’t too concerned about the competitive landscape, he was more interested in our financial assumptions and my team’s ability to implement in an agile fashion.

Angels vs. venture capitalists

Angels differ from venture capitalists in many ways. Venture Capitalists (VCs) typically invest over the $1M range, and more likely over the $3M range, but this has actually started to change over the last several years due to the increase of angel investor groups, and particularly thanks to “super angels” making investments. VCs are now having to compete with the “super angels,” as discussed in this TechCrunch article.

I like how the Angel Capital Association describes the difference between angels and venture capitalists: “Angels generally invest their own money in start-ups and very early stage companies, while VCs mostly provide capital they have raised from others to later-stage businesses for growth.”

Depending on the venture capitalists, they may want to own the majority of your company (i.e. 51 percent). This will definitely change company dynamics, so it’s important to conduct your due diligence on any investors who are interested in investing capital into your company. Always look at the portfolio of investments the firm has made, and contact the CEOs and founders of those companies to find out what it’s like having those investors as a part of their company. Ask them, point blank—would they take their money if they could do it all over again? And what have been the pros and cons of taking venture capital?

What impresses angels?

Since no two angels are alike, I thought it would be fun to include tips from a sampling of angel investors from around the United States about what impresses them—and in some cases turns them off—when meeting with entrepreneurs. I have enjoyed working with angel investors over the years because of how eclectic their backgrounds can be. Below you’ll hear tips from angels who come from all walks of life—from an angel by day, comedian by night, to a sales recruiter and trainer angel. They have all made investments in startups over the last three years, and have some fun and interesting tips to share on how to impress them, and hopefully make it into “startup heaven.”

Dan Whitaker - angel investor“I am impressed when the entrepreneur talks to me about solving a specific customer’s problem. If he/she really knows what the customer wants and is willing to pay for, I sit up and take notice.”

- Dan Whitaker, Angel from Corvallis, OR | Twitter | Linkedin
Tweet This Tip

 

Candice Yoneyama - angel investor“Entrepreneurs impress me most with a professional, but also kind/down-to-earth presentation. I must believe that they believe in their own product. They absolutely must be persistent. Angels get a ton of emails and the way they stand out is through relentless follow-ups (“Oh here’s this Pete guy again” vs. “who are you again?”). Correct spelling and punctuation doesn’t hurt, either.”

- Candice Yoneyama, Angel from Los Angeles, CA | Twitter | Linkedin
Tweet This Tip

 

Jessica Magoch“I’m impressed when entrepreneurs know their numbers inside and out and are realistic about their valuations. I also am attracted to companies who can tell me how they’ll be successful if they never get the next round of funding.”

- Jessica Magoch, Angel from Philadelphia, PA | Website | Twitter

Tweet This Tip

 

Don Dezarn“For me it comes down to “Intrapersonal Communication.” Every start-up has a great idea usually born by a “visionary” that’s going to create wealth. What follows next are projections and marketing plans—every start-up has them of course. So what’s going to separate “YOU” from all the rest? I’m swayed by people who can communicate and demonstrate to me why I should share their passion and motivation to get involved. As the start-up you’re selling yourself, your company and your vision—and you have to communicate to angel investors that you’ve got the ideas, the strategy, the team, and the ability to deliver what it would mean to become involved.”

- Don DeZarn, Angel from Eugene, OR Tweet This Tip

 

Dan Nainan - Angel Investor“I’m an angel investor by day, comedian by night. One of the things I look for when investing (in addition to the obvious question of can it make money) is a sense of financial responsibility from the founders. There’s a tendency when using other people’s money to fritter it away. For example, you may recall that the founder of GoDaddy spent $90 on a conference table, and he said it works just as well as a $10,000 conference table. I like to see a sense of responsibility when it comes to the environment, which dovetails with the idea of spending less money.”

- Dan Nainan, Angel from New York City, NY | Website | Twitter
Tweet This Tip

 

Kim Garretson - Angel Investor“Too many founders tread the fine line between arrogance and ignorance. Their pitch style, in trying to be confident, comes off as arrogant in saying they can beat the odds of failure at the pre-angel level, and they can beat competition often far ahead of them. Ignorance emerges when it’s often clear they haven’t really researched competition, especially when I hear the deadliest and dumbest statement: “No one is doing what we’re doing.”

- Kim Garretson, Angel from Edina, MN | Website | Twitter
Tweet This Tip

 

“I am impressed when an entrepreneur shows up dressed professionally, is articulate about who they are and why I should give them my money, and communicates with me in a language I can understand. I am after all, a layman with respect to their business—and my time is valuable.”

- Gena H., Angel from Eugene, OR
Tweet This Tip

 

Anthony Alfidi - Angel Investor“Entrepreneurs impress me when they demonstrate a proven revenue stream before asking for capital. This shows they have made a realistic assessment of the total addressable market (TAM) they can capture. They should also show that they have measured the cost of reaching that market by comparing a customer’s lifetime value (LTV) to the customer’s acquisition cost (CAC).”

- Anthony Alfidi, Angel from San Francisco, CA | Website | Twitter
Tweet This Tip

 

Tim Berry“Keep your strategy, tactics, numbers, and stories in alignment. Use a bare-bones streamlined business plan as the storyboard and make sure the summary memo, pitch deck, and main stories all match. It seems obvious but I see more than 100 pitches/plans every year, and at least half of them turn around and eat their tails at some point.

Forget the stupid IRR (that’s internal rate of return) that they taught you in business school. It’s the result of multiplying wild uncertainty by wild uncertainty by wild uncertainty, all in calculator mode, and it’s useless. And suggesting that angel investors want you to boil their uncertainties into a single number is either silly, naive, or insulting (I’m not sure which; I suppose it depends on context). Your investors want to imagine their own ROI numbers in their own way.

Be a line, not a dot. Keep up with investors and show them progress over time. Nothing adds credibility like milestones met. Don’t promise traction; demonstrate it.”

- Tim Berry, Angel from Eugene, OR | Website | Twitter
Tweet This Tip

 

Dan Fugardi - Angel Investor

“I love to hear brutal honesty no matter what, and a plus if it is tied to past experiences, even childhood, that makes integrity and transparency a top priority. Also you don’t have an answer for everything. If you get an obscure or surprise question no one would logically know as a fact, ask the question back ‘I’m not sure, what do you think?’ This will indicate what decisions will be like once in business together.”

- Dan Fugardi, Angel from Beverly Hills, CA | Website | Twitter
Tweet This Tip

 

Have a question for an angel investor?

Today is your chance to ask an angel for their advice. Post your questions to angels in the comments below and our network of angel investors will respond.

Don’t forget to share the feedback you get with @Bplans using the hashtag #AngelTip

About the Author Caroline is a two-time technology entrepreneur. She's co-founded and held the CEO position for two internet companies, OsoEco (social bookmarking/shopping site) and RealLead (mobile marketing for the real estate industry). Follow Caroline on Google+. Read more »

RATE THIS ARTICLE 1 Star2 Stars3 Stars4 Stars5 Stars
Loading...Loading...

How LivePlan makes your business more successful

LivePlan: Online Business Planning Software

If you're writing a business plan, you're in luck. Online business planning software makes it easier than ever before to put together a business plan for your business.

As you'll see in a moment, LivePlan is more than just business plan software, though. It's a knowledgable guide combined with a professional designer coupled with a financial wizard. It'll help you get over the three most common business hurdles with ease.

Let's take a look at those common hurdles, and see how producing a top-notch business plan sets your business up for success.

Click to continue
  • Cassandra Sailes

    Is it true that investors have never invested in someone they’ve never been introduced to? What are some things to avoid when looking for connections who can make an introduction?

    • http://timberry.com Tim Berry

      Cassandra Sailes

      1. Register for free as an entrepreneur at gust.com and browse the angel investor groups listed at gust for a group in your area or one with an association with your university or affinity group. Angel investor groups have organized systems for receiving submissions from startups.

      2. Avoid using people as rolodexes, by asking them to share contacts. If you know somebody who might know relevant angel investors, ask that person’s advice and opinion, not just who they know. Ask them instead to give you feedback on your idea and startup and when and if they do you that favor, listen carefully, and absorb it. And when and if it’s appropriate, ask them who they thing might be good to approach. Settle for one name, or two or three, at most.

      • Cassandra Sailes

        Thank you Tim

  • Caroline Cummings

    All of the angels I know have met the people they invest in, but there are definitely groups of angels (and definitely venture funds) where the money is raised by a few people and then some of those who commit funds trust those few individuals to make the right investment choices. But – with angels, I’ve never met an angel who didn’t want to first meet the team they are looking to invest in.

    • Cassandra Sailes

      Thank you Caroline

  • Cassandra Sailes

    What’s the best way to begin to meet and network with angels? I live in California near San Francisco. Are there certain types of events or conferences I should attend to make myself visible and meet more people?

  • John Smart

    So my question, of course, is will
    you invest in my start up? But perhaps a slower start on this would be prudent!

    Joking aside, I have a very serious problem that I could use help on. I need
    funding to get my idea going – its a great idea, and it is truly a $100
    million+ idea. (The numbers in the plan point to this, and whilst I risk using
    this phrase, the numbers are conservative – the entire math is there, it’s easy
    to check them).

    So, when looking at an idea that could be this hugely profitable on such a low
    overhead, I was initially seeking one amount, did all the work, got all the
    numbers, then I was told taht I would never get that funding for this idea.
    Given that the results were so huge, if I was seeking so little, no one would
    buy in.

    (lets add some numbers here – I was seeking $450,000 to cover dev, and 1st
    years expenses (primarily marketing/advertising).
    Based on this, I have reworked the numbers to 1,500,000. This is still a year,
    with much more marketing and advertising, and with a larger team speeding up
    deployment and problem solving time.

    So my question is: which path? I don’t want my offer to appear to be too good
    to be true, but equally, I don’t want to put off the angel investor by asking
    too much.

    And, whilst we are on that, the larger number would be split up as:

    $600,000 for the 1st three months ($300k for set up, hardware, software, etc,
    then $100k per mo staffing, utilities, and (mainly) advertising/marketing).
    Then, if not holding water by that point, we would take the next $300,000 for
    the next three months. (again, 100k per month, as before) Repeated throughout
    the year. It is expected that we would only need the 1st two or three to be in
    the black.

    And that leads to part 2. (I am not letting you off that easy – talking to you
    guys is tricky, I want to get all I can out of this!!!)

    I had a realization, and I want to know if I should include this, or if it
    makes me seem like a used car salesman. Or, do you already know this, and its a
    given?

    Here is the pitch I am not sure if I should include:

    “It’s a remarkably safe investment. Suppose my team cannot deliver the
    code. That would be apparent by the end of month three at the latest – so we
    could outsource the coding, and still be within budget. Suppose our advertising
    numbers are wrong, talk to social media marketing professionals, they will
    agree they are conservative numbers, and will happily take on the work, can’t
    fail there either. Suppose all our signups refuse to pay the negligible usage
    fee? Possible, goes against the research we have done, but possible. Well,
    then, with the users we have, and the data we have, obtaining second round
    funding to grow this further would be relatively (comparatively) easy, although
    selling at that point to cover investment and a healthy return should be easily
    achieved.”

    Thank you for your time, and any thoughts you can share
    (john@host2help.com)

    • Caroline Cummings

      Hi John – thanks for this info, but it’s really difficult to provide advice without knowing what your product is and what problem it’s solving in the marketplace. Also – if I had a dime for every entrepreneur who said “its a great idea, and it is truly a $100million+ idea.” Not to say your idea is not worth that much, but as I like to say: there’s no shortage of great ideas in the world, it’s a matter of who can execute and monetize that idea.

    • http://timberry.com Tim Berry

      @John, you have to sell the story — the market need, the solution — not the numbers. As Caroline says, “what your product is an what problem it’s solving in the marketplace.” Angels want to be able get the story and decide for themselves how big the possibilities. Anybody can put numbers into a spreadsheet.

    • http://jpmpartners.com Jessica Magoch

      Without knowing what your idea is, I’m assuming it’s pretty amazing. That being said, you should be able to get many of things you need first year for free, whether through incubators, accelerators, or donated talented (in exchange for equity). Your first hurdle is to inspire a team to work with you for free. Also, though I agree with marketing your product before it’s complete, your marketing budget is very high considering you won’t be able to convert them until your product’s complete, or at least at it’s minimum deliverable state. Also, the product you have in mind will likely not be the product you finally deliver. Customers will tell you what they want through the process.

  • Paul Harris

    My question is simply this: Investors seem to favour technology projects. Are there any that understand the Home Improvement sector?

    I have a brand new sales concept within a niche market, customer and manufacturers backing, potential global growth, huge diversity possibilities, based around technology with human interaction.

    Why, when VC’s are stacking up to fund stage one, cant I find anyone willing to seed fund for a guaranteed return?

    • Kim Garretson

      Paul, the home improvement sector is getting some attention from investors because of all the deals in the smart home, connected home space. Yes, these deals are tech focused. And of course, investors are looking for huge returns, like Instragram selling for a billion dollars with no revenue. But the home improvement space might be offering some interesting returns when you look at the acquisitions Home Depot and Lowe’s have made, perhaps a return of 5X to 10X on the first investments. I have good experience in this space, and happy to have a chat with you to see if I can be more helpful.

      • Paul Harris

        Many thanks for the reply Kim !
        I would be delighted to have an open conversation on Skype or the telephone, my contact details are Tel +44(0)1908 460502 0r Skype paul.harris1315 please send an invitation, I will respond immediately.

  • Gerald S Washington

    Hello, my question is, How much equity should you relinquish for your first stage start-up funding on investment of 7 million?

    • Caroline Cummings

      Hi Gerald. This is a very BIG question. There are so many other things to address before providing an answer to this question. For example, what is your industry? How far long is your product, how much equity has already been distributed, what lawyers and accountants are you working with (they can help with this), what does the market’s landscape look like, does your company have a valuation, etc.

      Also – how do you know you need $7M? Do you have a business plan with full financial projections? There are several moving parts to address first. I suggest finding a very good startup attorney with experience in your sector.

    • http://timberry.com Tim Berry

      @Gerald, do the math. You have to convince investors that your business is already worth $14 million to have them accept only 50% ownership; and already worth $21 million to have them accept only 33% ownership. So you’d better have a lot of traction already, a strong team in place, and either real revenue of several million dollars or real traction of lots and lots of users before you can think about those numbers.

      A $7 million first investment is extremely rare, once in a lifetime, reserved for deals coming from well-known entrepreneurs with track records so strong investors want in just because of them.

      What most startups do, realistically, is focus down on a seed round of a few hundred thousand dollars. Raise that, prove your business with milestones met, then go for a series A of a few million. Take realistic steps first.

  • Shay

    Hello,
    my question is, how do I connect with multiple investors that are abroad (USA for example) and make a pitch with them? and how do choose the right one for a specific type of startup?

    • http://timberry.com Tim Berry

      @Shay start by recognizing that angel investors are not likely to invest outside of markets they know well. Sure, there are exceptions, but that’s a general rule. Don’t spend too much effort trying to find angel investors far away from the business you expect them to invest in.

      If you’re not operating in a market that has a lot of angel investment, look around you, see what other people are doing. Many developing markets have governmental and NGO funds available for selected startups. And sometimes larger businesses, especially the larger family businesses, become investors.

      I have enough experience in Latin America to know that angel investment is not a realistic option in every market in the world. If that’s the case, for you and your business, I suggest you research alternatives.

      BTW, if you insist that you are the rare exception, there are several good sites and platforms you can use to try to get the attention of US angels. Gust.com, Y-combinator, Angelist, tech stars, and so on. Look for angels who understand your business, market, technology, etc.

  • http://www.stewardrecovery.com Michael F

    Im new to the angel investor scene and really investors period. I started my company w/ my last $300.00 and now its grown to me owning $4 million in real estate and just started the second phase of the business being asset recovery, where we, long story short, retrieve money for folks from the court system and its big returns. So that compiled with the real estate portion of it has been lucrative. We have an in house construction crew so my cost is half of that of another investor and we have a model that is very rare if done at all. Problem is we want to expand and Im new to raising capital. Mind you I have done all this inside of 1yr but now its time to grow and needing funding to do that. ANY help would be more than appreciated. ??????

    • http://timberry.com Tim Berry

      Congrats on your success. Don’t assume funding means angel investors or any kind of outside investor. Look into more traditional financing using debt, or partners, and other alternatives. Look to angel investment only if you can offer the angels high growth prospects, scalability, and defensibility. Angels make money only if your company gives them a way to take their investment liquid in a few years. Look into the other alternatives in the funding section of this site … http://articles.bplans.com/financing-a-business/

    • http://jpmpartners.com Jessica Magoch

      Hi Mike,
      From what it sounds like in your post, you are at the right stage for which most angels would want to invest: time to scale. That being said, if there is any way to fund your growth with your current revenue, you should. You may want to seek funding if you need to scale quickly (for instance, to beat competitors to the market). Going through the exercise of writing your business plan will be very helpful in determining if you need investments or just a line of credit from a bank (if you’re an established business with assets this is feasible), and what your exit strategy is.

      • http://www.stewardrecovery.com Michael F

        Hey Jessica,

        I appreciate the insight. I take an advice or wisdom I can get my hands on. With the matter of using the business, that wont work as far as I know because It’s less than a year old> As far as the business plan, I actually just finished mine 2 weeks ago and that is what made me see that I needed to expand. The asset recovery side of my business is terrific but the only problem is I’m on a 60 – 90 day wait for my checks because of dealing with the federal government. I have the ability to scale to every state with in all honesty almost ZERO competition thats is why with the help of an investor I can do that. Our model works very very well and I designed the same as a franchise model so it can be duplicated and get the same exact results every time & I accredit that business model to Michael Gerber who i got that idea from. With having an investor come in, I can show them a great return and still have the company be super super successful still. To give you an idea, it costs me about 33.00 to 750.00 per file and I bring in 3,000 to $200,000 per file depending on the deal we are working. Now in the court Im in now Im closing 22 deals every 2 weeks, meaning doc’s out to a claimant and back in 2 weeks then out to the court for payment. this court is smaller deals around the 3,000 range. To do the bigger ones I need to have a location in each state so I can access the county files so I am pigeon holed to only NY right now until I can expand and this is aside from the real estate. To me having a private investor is better than a bank, the bank is cut & dry, fit in their mold of financing or its a NO GO, its not custom molded like an investor. I know pretty well how they are I did finance for 10 yrs and its worse now. Any who, let me not ramble. Again thanks for your insight, it is much appreciated.

  • http://timberry.com Tim Berry

    @Eric, angel investment is probably not the right way to go. Your $50K amount is low for normal angel investment because the legal costs are about the same as for $250K; and you don’t want to inflate the investment just to get angels — they would be dumb angels, and that’s not good (and not that easy to find). Your $50K amount is usually raised through personal funds, personal borrowing, or friends and family.

    Take another look at the SBA loan option. The SBA has different programs and they don’t all require profitability.

  • http://timberry.com Tim Berry

    Start in Dallas. Use this google search to find several groups local to you: https://www.google.com/webhp?q=angel%20investment%20groups%20in%20dallas

    Look for angels with a history of interest in construction, construction-related, and green businesses.

    And be very careful not to overuse the clichés that angels hear all the time. At least two thirds of the pitches I’ve heard in the last two years claim “disruptive” and “change an entire industry.” And every one of the angels I know would much rather be smart than “hungry.” Sell the story of your deal, the market need, the product-market fit, and let them decide whether it’s disruptive.

    • http://jpmpartners.com Jessica Magoch

      Well said.

  • http://timberry.com Tim Berry

    @Frank congrats on your design, and I agree with you about the need, and I sympathize with the idea that our government should be granting funds, but then the public sector can’t even provide good public education any more, so dream on.

    Be careful with your website, it may be violating SEC regulations on general solicitation. I’m not a lawyer, but if I were you, I’d check.

    Angel investors are just people, like you and me, with money to invest in risky startups in the hope that what they spend today to help the startups will generate a fair return later. If it’s about making the world a better place, you want donations, altruists, not investors. Think about foundations like the Gates Foundation, but interested in your cause. I just googled “foundations concerned about hydroponics” and came up with …

    http://web.mit.edu/12.000/www/m2015/2015/hydro_agriculture.html

    http://whfoods.org/

    http://ghfoundation.org/wordpress_p2/

    If you’re serious about angel investors, talk about markets, solutions, revenues, growth, scaling, and of course exit strategies and return on investment. Need is good, yes. And the angel investors I know would rather, all things equal, invest in a good cause that’s good for the world than in just a good business — but it has to be a good investment.

    • Jessica Magoch

      Hi Frank,
      I agree with Tim, but I will add that there are angels and angel groups who focus on social ventures, such as yours. That being said, you need to be clear on how you plan on monetizing your business. At the end of the day, if you are going to turn this idea into a business, it needs to make money or it can’t help anyone.
      Jess

  • http://timberry.com Tim Berry

    @Ron you don’t reach angel investors by posting that info on this site. And check quickly with a good attorney about SEC regulations and general solicitation. I’m not a lawyer, but this is an issue when you post info like yours on the open web.

    No legitimate angel investor is ever going to read your comment here and dial your number or email you. That never happens. All you get by posting that info is open season for spammers and crank calls.

    I have some other comments on this post about how to reach angel investors. Look at my answers to Cassandra Sailes and Angel G.

  • http://jpmpartners.com Jessica Magoch

    I hate to be Negative Nancy, but the first thing I am concerned about as an angel is IP from your former employer, confidentiality and noncompetes that were probably part of your employment. The way you described it sounds like you are taking their content and business practices, adding a twist, and packaging it as your own. Make sure you look into the legal implications of starting this business. If you get to any substantial size it will matter. If that’s not the case, work on your pitch so it doesn’t read that way.
    If your company is going to net $500k per year, that is a good income for you, but doesn’t allow others to make money. So, from an angel perspective, you’re saying it’s not scalable. It can make a great small business for you, though, so you should look more towards business loans or friends and family fundraising.

    • Eric

      Thanks for the advice. I have been in contact with sr. legal council at the former employer and have ensured that no violation of confidentiality agreements have or will happen. All content is original and the company is fine with it. There was no “no compete” agreement.

      The business certainly has the potential to grow beyond the $500k per annum mark. My closest non OEM competitor nets in the $2-3 M range. I do appreciate your comments, though. This tells me that I need to adjust my pitch, not my goals. Thanks!

  • Jonathan_Bplans

    Question(s) for the angel investors from Kadjman on reddit:

    “What are their foremost thoughts when considering if they should invest or not? What do they look for to change their mind? How willing are they to help you out by connecting you with other angels that may be interested?”

    • http://jpmpartners.com Jessica Magoch

      Founder. Trust of the founder. I once reviewed a deal where the patent was a key piece to the investment. When we looked up the actual patent online, it was misrepresented for what it really was (the patent was for a smaller piece of their product which was not necessary to end product .. ie. the small part that was patentable could have easily been substituted by a competitor). As excited as we were about the product, our relationship with the entrepreneur was dismantled. If an angel is excited, she will get others involved to help with the growth and their expertise, especially if she’s trusted for her due diligence efforts.

  • Jonathan_Bplans

    Question from Wannabe2good on reddit:

    “Of your investments, what percentage return profits?”

  • Jonathan_Bplans

    Question(s) for the angel investors from kylecares on reddit:

    “Who are the last 5 companies you’ve funded? What did they look like when you first met them? What did they look like when you actually invested?”

  • Jonathan_Bplans

    Questions for the angel investors from CookieMan459 (with help from joshu) on reddit:

    “How involved are you as an investor? When you are involved, what do you like to do? What do you typically do?

    Who do you typically work with as coinvestors, syndicates, and follow-ons? What is that relationship like?

    How do you source deals? What are you looking for in a company to invest in? How many deals do you do a year? What is your investment thesis?”

    • http://jpmpartners.com Jessica Magoch

      1. I try not to be involved unless it pertains to my specific area of expertise and the founder has asked for my advice. I am usually called on to help in the hiring, training and management of sales people, building compensation plans for sales people and testing different sales channels.
      2. Some are with angel groups, others are independent, but usually only if I know the founders personally.
      3. Source through angel groups, tech meetups, networking. The second part of that question is a long answer, there is a three page due diligence checklist I adhere to and a spreadsheet that helps me quantify opportunities so I am not just swayed by excitement. The most weight goes to the founder and management team. Founder’s experience, completeness of the management team and advisory board, coachability and willingness of founder to step down as CEO if necessary. Much of the rest is market size, opportunity, traction, exit strategy, and how much funding they are seeking. I do 1-2 deals/year. I invest in for-profit social ventures. That means companies who make money by making a difference. I don’t generally get excited about a company that will just make money without having any social or environmental impact.

  • Jonathan_Bplans

    Questions from stijnh1 on reddit:

    “Say the startup looks like it is about to run out of money and/or the product launch was a complete disaster, would you rather negotiate a acqui-hiring deal to get at least your investments back or would you look for ways to get more money in order to stay independent?”

    “Are you investing in 10 companies in the hope one will have a huge return?”

    “How big is your current portfolio and how big do you feel portfolios of Angels should be?”

    • http://jpmpartners.com Jessica Magoch

      1. I would look for an acqui-hiring deal. Everyone’s stock will get diluted if you look for more investments if you can find it. Angels are less likely to invest in a company to fix its mistakes.
      2. 10 or more… 20 is better.
      3. Angels come in all shapes and sizes. Mine are small since I’m just getting started, but there are also super angels. As far as a portfolio size, it should be a percentage of your over all investment portfolio. Maybe 10-20%…

  • Jonathan_Bplans

    Question from PolarCamel on reddit:

    “What is your exit strategy?”

  • http://jpmpartners.com Jessica Magoch

    Baby steps. You need to prove that people will buy it first. I see you’ve set up a landing page to collect orders. You should see if you can get an major orders from retailers and then ask for money to do the production.