TBC: Why Raise From Angels PART TWO

​[00:00:00]

Hey guys, welcome to another episode of the back channel. And the last episode I talked about this feeling I've been getting in most founders that I talked to getting ready to raise rounds of capital, where I'm just like, I don't think they're ready to go raise capital.

I just don't think. The combination of where their company is, the credibility they have, the momentum they have is going to be what it takes to raise from venture capitalists. The conclusion and the encouragement that I was driving towards was that. Uh, angel rounds may be the type of capital. Most people should be raising, especially in the earliest rounds. Especially with everything that can be done. With AI, no code and oversees talent.

At the end of that episode, I teased that I would drop another episode to kind of walk you through what I think a founder needs to understand about raising from angels and maybe some tips and tricks, or at least a light level playbook on how to get this done. Now the [00:01:00] first thing I think that is really important in any type of fundraising is to understand what you have.

I think this is a good message to send to everyone. Who may or may not be raising for a definite venture style outcome, but instead just might be raising money for a really healthy business. There's so many of these companies that believe they need additional capital to get to the next stage, but the only type of capital they think of is venture capital, which requires them to think about. Moonshots. When maybe just running a great e-commerce business is what you want to do.

And the types of capital that you should be raising might not be. From venture capitalists. So when it comes to starting the process of raising from angels, think to yourself, what is it that I'm building towards? What am I actually able to offer to angels? And then really try to translate that into what is the promise. That I will be selling to these angels. Will it be the promise of potentially going out and [00:02:00] creating a billion dollar company. Or will it be the promise of saying I'm going to try to build. An amazing business that I actually think can get to this level of success. Three locations of a CrossFit gym in Los Angeles.

A new type of almond butter that I sell in local grocery stores And potentially in a whole foods and trader Joe's. Maybe those are the levels that I'm trying to get to, but be specific and be clear on what you're trying to sell. Okay. And from there realize that there are different types of angels out there. Angels who are doing this as a business and actually have a clear ROI in mind, combined with a portfolio strategy. That's more professional angel investor. There might be the next level of an investor that knows what they're doing. But honestly is just trying to be in interesting deals, being the flow. Be a part of the ecosystem to give back. and then there might be the angel investors. Who just [00:03:00] want to support you? Because they're part of your community.

They want to see you go after your dreams. And they may have lower expectations around. What the return profile of their investment isNow think about each of those different type of angel investors and how your particular deal or the promise that you think you can provide. I would actually match up with them. Okay.

from there. Your job is to try to find as many possible angel investors in your network. And go after them.

This is going to be a volume based sales game.

​

[00:04:00] The great thing is that you have two networks that you can tap into. Your email. So checking in your email about who you emailed in the past and LinkedIn. Searching your own networks to see who might look like an angel investor. The two ways to do that are [00:05:00] looking for people that actually describe themselves as angel investors.

And then the second way is to think about the types of profiles that you think might be. A worthy and good fit angel investor for your type of business. Maybe you're doing a restaurant. So you want to see people who are exposed to and interested in the food and beverage industry. Maybe you're doing something in software, in which case you might want to look at Senior level engineers who are working at companies and places that would allow them to understand the stuff that you're working on. And from there, he just got to keep reaching out. This is going to be a numbers game.

And in order to raise the money that you want, you're going to have to go out at huge volumes. You can't expect a really high conversion rate, even amongst your friends.

And the last thing I'll say is

Whenever I talked to people about the strategy of raising from angels, it'll often come out that they don't feel comfortable asking their personal network. Whether or not, they want to join the [00:06:00] round.

And there are real reasons why you might not want to ask your friends. Your cousins, your, your, your buddies from undergrad, there might be real reasons, but what I usually challenge people on is in order to raise money from anyone, you have to fully believe in your idea. And the promise that you're going out with.

And if you truly believe that you would be able to deliver on that promise. That you would work really hard. To try to get a cross-region opened up. Scale it to three locations and that it would deliver on a certain amount of scale and revenue and profitability. If you truly believe that, then you should give that opportunity to everyone.

You know, especially the people that are closest to you. let them decide whether or not they want to participate. In your adventure, whether or not they want to support you and whether or not they want to roll the dice on the opportunity that you're presenting to them. You really have to feel comfortable making those [00:07:00] asks because if you don't feel comfortable asking the people that are closest to you, how are you going to do this a hundred, 200 times in a row to raise the capital that you need for your project?

Okay. I hope this was a directionally helpful episode and thinking about what it means to raise from angels. Let me know if you have any other questions about how to get this done would love to hear from you and I'll see you on another episode of the back channel.

‍