If you're looking to raise money, seeking an angel investor first is a damn good fundraising strategy.
Here we'll tell you why.
Imagine you’re trying to climb the Aconcagua, one of the highest peaks in South America.
Who would you call first to join you in this venture?
Your friend who's a risk taker, adventurous, and a let's👏do👏this👏 person? Or a more cautious friend?
Angel investors are the risk-takers of the pack: they jump on board very early in the process and embrace a higher risk with their own money. What do they stand to gain? More chances to grow that sweet, sweet valuation. 💰
That's their game.
Angels will not only climb the mountain with you but they’ll call 10 more risk-takers to join the adventure. They'll commit to the team and spread the word about how smart, marvelous, good-looking, unique, creative, and sharp you are. 😎
They'll become a part of your team and the cheerleader you need to sell your startup like hot cakes.
And why is that? It's all about the money, money, money 🎶 buuut it's about honor too.
"When you’re an angel investor, you are writing a check on your reputation and sticking your neck for a founder," says Tomi Roggio, Head of Ventures at Latitud, ex music bands groupie.
📌 A final benefit: getting the best angels on board is a BIG signal to BIG VCs. Because if CoolAngelInvestor#1 is making a move with you, there's probably something good cooking.
With that seal of approval, the rest of your round might come more easily.
👉 Remember: don’t go pitching to the big ones right away. Pitch people you can get to know extremely well and are interested in your vision.
As Tomi says: "Start from your core network and build up".
✍️ Investors live and breathe pitches and term sheets everyday. Leveraging your position in the face of asymmetry is not an easy task – but it can be done.
🍋 Recipe #6: Build a relationship with investors
You might need to have a bunch of talks before getting anywhere near to really knowing a VC, not to mention getting his investment proposal. Jeeves got an investment from a16z after talking with them for a year, for example.
“Expecting to go to a meeting and getting out with a check is like going to a bar and expecting to leave out married”, explains Jonathan Lewy from Investo.
You know what's a good way to build trust with investors? When you say you're going to do something, actually deliver on it.
“As an investor, you want to make a decision based on a movie and not on a picture. The best thing that can happen is when you talk to a founder, they tell you something, and three months later it is done”, says Jonathan.
Even if you end up receiving a no after all the relationship-building, it doesn't necessarily mean that you will never get a check from that VC – you might just need to work on some parts of your business.
Deliver on it once again, and reconnect.
📌 Are you a Brazilian startup fundraising and need some help to incorporate? Visit Latitud Go and check how we can make your life easier 😎
The Latitud team has been on an offsite week somewhere in São Paulo with the faster wi-fi of Brazil. Yay.
(If we took extra time to reply to your emails, this was why.)
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