Finding the right investor is the key to securing investment.
I’ve previously talked to you a lot about the need to match your startup with the right investor – not just picking a person with money.
And when it comes to targeting the right investors, the Internet offers plenty of options.
The Internet is, indeed, so good you can find dedicated investment platforms – it’s like a treasure trove for startups! Investors are everywhere.
So, how do you make the move and contact the right investor?
Well, you should try contacting the right VCs and other investors by hacking AngelList – and here’s just how to do it.
AngelList could be described as the Match.com for startups.
If you don’t know what that particular website is about, let this simple graphic describe to you the process:
There’s also another element to AngelList, which is worth mentioning, but which is not the point of this post. On AngelList, you can even find other entrepreneurs and experts to work on your project. So, if you’re looking for a founding partner or just help with your project, you can use the platform to match with the right people.
Therefore, AngelList is the best place to be if you are looking for a job, raising money or looking for an investment opportunity.
It allows you to create a profile and start searching for those who can help you with your specific needs.
How does it work?
Let’s delve a little deeper into how the platform works.
Unlike Match.com, you can’t just create a profile on AngelList.
You need to submit a private application to the service, out of which around 1-2% startups are approved – or ‘featured’.
Yup, it’s a tough platform to ‘hack into’.
Now, when your startup is approved like that, you’ll be provided with an access to the recommended investors.
The recommendations are based on your market/industry, the stage of your startup (seed, Series B, etc.) and the location.
You will be able to browse the selection of investor profiles and select those you’d like to talk to and to pitch your startup idea.
When you make the connection, the investors can view your profile and get back in touch with you if they are interested in hearing more about your business.
Now, AngelList hasn’t stayed stagnant over the years.
It introduced a new investment feature called Syndicate a couple of years ago.
This is a useful feature for a startup because it allows an investor to lead your investment round and invite other accredited investors to back the deals.
In a sense, by using the Syndicate, startups are able to have an investor lead the round – a crucial way in attracting more investment. Investors are like pack animals – when one gets interested in a deal, others don’t want to miss out.
More recently, the platform has introduced an option called the Fund.
This is similar to Syndicate, but instead, the other investors choosing the investment projects they want to invest in (i.e. getting in touch with the startup), the Fund makes it possible to invest blindly.
Essentially, investors sign up to back a special syndicate lead without knowing about the startup projects they are interested in.
It’s similar to your typical private equity fund, for instance, where investors might hand out money and allow the partners to make the investment decisions.
In the Fund, it’s the lead investor who decides how much money they’ll invest and to which target.
Perhaps the most obvious change in recent years has been the platform going private. AngelList used to have public rounds that anyone was able to view – nowadays; the fundraising platform is operating privately.
Why should your startup care?
So, AngelList can help you match with investors in a more controlled and unique manner.
Why does it matter? Can’t you just find your VCs and angels on Google?
Consider the success of the platform for a second.
In 2014, 2,673 investors raised $104 million for 243 startups. A year later, the platform raised $163 million.
Catching investor attention is difficult. Nearly 90% of startup pitches fail to attract investment.
Therefore, you should really embrace all the opportunities life throws in your way to get investment.
More specifically, the AngelList platform is essentially just one of the many opportunities you have to seek investment – but that’s the point.
It’s another good way of making initial contact with the investors – and crucially with investors that fit your ideal investor profile.
With the platform, you can put your startup out there and tell the investors “Hey, I’m worthy of attention”. Especially so because not every gets to have a profile on the site – the investor knows your idea has already been scrutinised.
Now, there has been a lot of criticism against AngelList. You can read some of it here.
But the truth is, AngelList is a handy platform for getting in touch with VCs and networking.
The trick is just to do it right and to understand it should be one of the tools in your fundraising process – not a single platform to rely on.
So, how can you get in touch with the right VCs on AngelList?
Now, what about hacking the platform?
Hacking, of course, means taking advantage of something in this context. And when it comes to taking advantage of AngelList, you need to take a few specific steps in three different stages.
Stage 1: Before joining up
Before you start creating your profile and connecting with the investors, you really need to ensure the most basic rule of fundraising is under control.
You need to be investment ready.
I’ve written extensively about investment ready here and it’s a good idea to read it before you go further in this post.
To put it shortly, investment readiness means your startup is able to attract investors by being an investable business – your idea, team and operational plans need to be mature enough to work.
It doesn’t matter how much you connect and contact the right investors if your startup just isn’t ready for the investment.
As much as you want the investor to be the right for your startup, you also need the moment you seek the investment to be correct.
Now, aside from investment readiness, you also need to think carefully what you want from the investment.
There are three components here to think about:
Clearing these issues will prepare you for knowing what your ideal investor on the platform will be and being more prepared in terms of making your pitch.
Indeed, the final puzzle piece that you need to take care of before you sign up with the platform is the pitch deck.
You can use portions of your pitch deck in your profile and you’ll need to send it to interested investors you connect with on the platform.
Naturally, you need to have it before you start e-mailing the investors.
Stage 2: While joining up
Now, the most important part of the hacking process happens during the profile creation.
By creating the perfect profile, you increase your chances of being noticed by the right investor – you use the profile to limit and define the kind of investors you are looking for.
So, what is the secret to hacking the AngelList profile?
There are a few simple rules to the perfect AngelList startup profile:
- Add as much information as possible – The more information the investor can find from your profile the better.
- Use a photo – preferably a company logo or your own picture.
- Make sure information is correct – your contact details have to be correct or you miss the chance of investors getting in touch.
- Consider using different forms of media as part of your profile – video is a great addition to a startup profile.
When writing your profile, focus on those above pointers.
By adding enough information and using photos and videos to make it more engaging, you create an interesting and actionable profile for the investors to see.
For examples of good AngelList profiles, check out the following:
Now, you might be tempted to add your pitch deck to your profile.
This is not a good idea – you want to make sure the VCs that are interested seek it directly from you, according to Ajay Yadac, CEO and founder of Roomi.
This ensures you know who is interested and you can continue staying in contact with them, even if they don’t want to move beyond the initial interest.
If anyone can just freely view it, you limit your chances of making a connection.
So, instead of adding the pitch deck to the profile, include a sentence such as this to your profile information:
“Pitch deck available upon request, don’t hesitate to ask.”
However, you can use your pitch deck as a lure.
Remember how I told you to use different forms of media on your profile?
Well, adding a few slides of your deck can be a good idea. For example, you could include the team slide or the potential market slide to show what your pitch deck is about – use the slides that make the investor want to know more, not the most revealing slides.
Now, in terms of the information on the profile, the focus lies on three core ideas:
Before and after your initial sign up on the site, your focus should be on finding a lead.
Just like with most fundraising, it really helps to have a lead on AngelList.
Why is finding a lead a good thing? Because you can use it for networking – you get a much wider access to investors when a lead is helping you. Furthermore, having a lead tells the other investors you’re a good investment opportunity – someone has already done a lot of the hard work of looking into your business and found out that you’re worthy of investing.
If you do have a lead on AngelList, the key is to not rest on it and simply hope for them to work for you.
Leverage their contacts and ask for those initial introductions.
But be also ready for continuing the discussion and moving the deals forward. In essence, don’t just sit and wait for a lead to do the work for you.
Stage 3: After you’ve joined
Once you’ve created your profile, you will receive a list of investors to contact.
The list will be extensive and you clearly won’t be the right match for them all.
You can create an Excel file of the investors and narrow down your search. The things to consider when creating a priority list of AngelList investors:
- Stage of investment – if you’re a seed startup, you probably don’t want to waste your time contacting investors who only invest in Series B or later.
- The industry/market interest – again, you want to find angels and VCs that have past experience and understanding in your startup market. Some investors never want to invest outside this expertise so focus on it.
- The location – you definitely want to prioritise investors in your location. Meeting investors face-to-face is always more effective and it’ll be easier if you don’t live on the other sides of the planet.
- The type of investor – depending on your investment needs, you also need to consider the kind of investor you contact. Angels tend to invest only at the early stage since the investment sums are smaller than with VCs.
One other point to consider is the investments the investors have made recently. Investors who have been super active might actually not be as interested as those that haven’t been investing lately.
This is purely about the numbers. VCs, especially, only make a certain amount of investments and they might have run out of capital to allocate if you contact them. On the other hand, those that haven’t been investing lately might really be looking for that perfect investment opportunity.
Once you’ve compiled your priority investor list with the AngelList contacts, you want to start the research
Before the initial e-mail or call, you need to do one final thing: find a connection.
Investors love being introduced to new startups by people they know and trust. This makes it easier because you’re not just talking to someone random – you’re talking to someone who your friend/colleague/contact has deemed to be a respectable entrepreneur.
Look up the investor on LinkedIn and social media and see if you can make a connection. Perhaps you share a friend or the past (for example, you’re alumni).
You should even look up the investor’s previous investment. Perhaps they’ve invested in a startup that you know about – maybe your friend works for one of these startups!
When you find the connection, contact them and ask for an introduction or a good word.
Explain your startup and check if the person can help you get in touch with the investor in question.
You should, of course, connect with the investor directly if connections are not there. But having someone else make an initial introduction or knowing whom to mention in your contact can be beneficial and it might just get the ball rolling quicker.
Here’s what Brian York was able to achieve with his ‘connection’:
Now, as you start talking to investors it’s important to keep in touch on and off the AngelList platform. Update the investors on new projects or events – remind them of the interesting developments. This way, they’ll stay on top of what’s going on and perhaps start noticing your startup’s increasing momentum.
Use your Excel sheet to stay informed about what the investors have responded. It helps you focus your efforts on those who might be interested and the ones who clearly aren’t that excited.
For example, check out the example template below:
Photo Credit: SeedStageCapital.com blog
Finally, just like with any social media and networking platform, follow people back when they follow you!
The bottom line of hacking AngelList
AngelList is not going to be a saviour to your fundraising problems.
It’s essentially just another tool you can use as part of your fundraising efforts.
But for the platform to use, you need to still do the hard work. You can’t cut corners.
And what do you think it takes to get an investment?
You need your startup to be investment ready.
You need to know what you want from the investment. Not just the amount of money you need and for what purpose, but also the kind of investor you want.
You’ll need to do a lot of networking – talking to the investors, creating connections, and selling your startup.
The fundraising platform is just another fundraising opportunity – and a good one at that.
However, you’ll still need to bring your A game and have a startup the investor wants to invest in.
So, what do you think? Will you give AngelList a go or do you see better opportunities elsewhere?