How to Connect With and Pitch to Angel Investors

Getting funding from angel investors can be a huge boost when you’re starting or growing a business. But making the right connections and delivering an effective pitch takes strategy and preparation. In this comprehensive guide, we’ll look at proven techniques for finding and successfully pitching angel investors.

What Are Angel Investors and How Can They Help?

Angel investors are high net worth individuals who provide financing to startups and small businesses in exchange for equity or convertible debt Unlike venture capital firms, angels invest their own money rather than pooled funds.

Angel investors can provide capital in the range of $25,000 to $2 million. This helps entrepreneurs get their ideas off the ground in the earliest stages before generating revenue and qualifying for bank loans.

Beyond just capital, angel investors can also contribute invaluable mentorship, industry expertise, and connections. Having an experienced advisor on your side greatly improves the odds of startup success.

Where to Find Angel Investors

Finding the right angel investors aligned with your industry and business model takes a systematic approach. Here are some of the best places to connect with angels:

• Angel Groups and Networks – Join local organizations that hold pitch events and match entrepreneurs with angels. Some well known groups are Seattle Angel Conference, Houston Angel Network, and Bay Angel Network.

• Angel List – Create a startup profile on this platform Angels can discover your company and request introductions through the site

• LinkedIn – Identify angels by industry expertise and location. Reach out asking for introductions to angels accepting new pitches.

• Startup Events – Pitch competitions, conferences, and incubators are great places to network with the angel community.

• Accelerators/Incubators – Enrolling in a top program like Y Combinator or TechStars often leads to angel investor introductions.

• Warm Introductions – Leverage your own network and ask for referrals to angels relevant to your space. A warm introduction goes a long way.

• Angel Websites – Research individual angel’s websites to find their focus areas, pitch requirements and contact forms.

Take time to identify the best angel investors for your specific company based on their expertise, portfolio, location, and investment thesis. Then get warm introductions whenever possible.

How to Pitch Angel Investors

Once you’ve made connections, you’ll need an effective investor pitch to seal the deal. Here are key tips for pitching angels:

Perfect Your Pitch Deck

Create a 10-15 slide deck covering:

• Problem/solution
• Product overview
• Traction/growth
• Team
• Financial projections
• Use of funds

Make it visual, easy to grasp quickly, and tailored to each angel.

Lead With the Problem

Explain the specific big problem you’re solving for a defined target audience. Get the angel invested in the problem first.

Demonstrate Traction

Prove that people want your product using metrics like active users, revenue growth, customer testimonials, pre-orders, etc.

Introduce Your Team

Your team’s experience and abilities will build confidence in your ability to execute.

Outline Your Product Vision

Share your long term goal for dominating your niche and growing an industry leader.

Make The Ask Clear

Tell them exactly how much you are fundraising and how their investment will accelerate growth.

Know Your Metrics Cold

Be ready to answer detailed questions about your financials, projections, customer acquisition costs, etc.

Highlight Exit Opportunities

Illustrate how the angel can realize big returns through a future acquisition, IPO, or buyout.

Tell a Story

Weave in stories, analogies, and examples that make your company relatable. Stories stick in investor’s minds.

Listen

Pick up cues on which parts of your pitch resonate and linger on those areas.

Follow Up After Pitching

Persistence and professionalism in following up will leave an impression.

• Thank You Email – Send a thank you email recapping the big points of your pitch and value proposition. Include your deck.

• News and Traction Updates – Continue to update the investor on your latest milestones for 3-6 months post-pitch.

• Address Concerns – If they pointed out gaps in the pitch, follow up explaining how you’ll address those issues.

• Ask for Introductions – See if the angel can connect you with relevant experts and partners to grow your business.

• Stay in Touch – Periodically send relevant articles or other helpful resources without constantly asking for an investment.

With a compelling pitch and persistent organized follow up, you can turn an angel investor into a key ally and advisor as you take your business to the next level.

Realistic Timeline and Expectations

Securing funding from angel investors takes patience and perseverance. Expect the process to take 6-12 months from initial outreach to closing a funding round.

Why so long? Here are some reasons:

• Angels are evaluating multiple deals simultaneously.
• They invest slowly and selectively over months of due diligence.
• Your industry may impact their speed (fintech moves faster than biotech).
• Negotiating terms takes time.
• Only 0.1% of startups who pitch actually get funding.

With persistence, savvy communication, and strategic targeting of the right angels, you can beat the odds to join that elite 0.1%. But manage your expectations realistically so you don’t get discouraged by an extended fundraising journey.

Alternatives If Angel Funding Falls Through

Angel investment is never guaranteed no matter how strong your pitch. But all is not lost if you fail to secure an angel round. Some alternative funding options include:

• Bootstrapping – Reinvest revenue and keep costs lean. Many hugely successful startups like Mailchimp and Airbnb started this way.

• Crowdfunding – Raise smaller amounts from a large pool of investors through sites like Kickstarter and Indiegogo.

• Bank Loans – Get loans or lines of credit once you have revenue and assets to secure the loan.

• VC Funding – After 12-24 months of traction, pursue venture capital. VCs make larger later stage investments.

• Revenue-Based Financing – Companies like Clearbanc provide non-dilutive growth capital in exchange for a percentage of revenue.

• Grants – Federal and state governments offer grants for small businesses. Explore options like the SBA Small Business Innovation Research program.

Key Takeaways

Connecting with the right angel investors and persuading them to invest takes time and strategic execution. Remember these tips when starting your journey:

• Identify angels through platforms like AngelList and warm introductions.

• Create a polished pitch deck tailored to each angel.

• Lead with the problem and demonstrate traction.

• Make the funding ask and exit strategy clear.

• Follow up persistently with progress updates.

• Manage expectations on timing – securing angel funds often takes 6-12+ months.

• Consider alternative sources like bootstrapping and crowdfunding if angels pass.

With hard work and resilience, angel money can be secured to turn your big idea into a high growth business.