Angels: Development or Momentum?

by Giff on January 15, 2010

Aprizi is not in a mad rush to raise a seed round, but it is something we want to do and I have been thinking about when to start expanding the conversation beyond a few folks who already know me.  An interesting question arose last night when I mentioned to another entrepreneur that I was heading to Australia for 2 weeks in late Feb (the kids have to see their great-grandma!).  I’ll be working in Oz, but for this kind of stuff, I think you want to be in the same room.

The response from this entrepreneur was (as I understood it): don’t approach angels until you get back.  It is a momentum game and you need to strike while they are hot, otherwise the next thing could come in and their energy towards you might get lost in the shuffle.

I won’t pretend to be an expert at raising an angel round, so I reached out to a few other smart folks.

I asked Joe Beninato, a serial entrepreneur and great mentor, what he thought.  His response (which he also tweeted) was the following:

“In the spirit of “customer development” I believe in “angel development”. Start conversations early with angels before you’re even ready to “pitch them,” tell them what you are thinking about (even without a deck), get feedback, and then over time show them progress. The fact that you are gone for 2 weeks is not a dealbreaker … you will still be working while you are away, so while you can’t meet with people for 2 weeks, you can still demonstrate progress.“

Another entrepreneur currently running a VC-funded and very successful company shared this opinion: don’t wait to start. If a process gets moving, just push hard, use video conferencing, and make it happen from wherever you are.

And finally, another young venture capitalist agreed with the first opinion: wait until you get back to get things going so you can keep the momentum up, not to mention that you’ll benefit from the product being that much further along.

So… mixed opinions.  One approach could be to keep building relationships with folks where I already have a connection, but hold off with folks who do not know me at all.  My historical view has been closer to Joe B’s advice of “angel development” because fund-raising always takes much longer than you think.  I’m still pondering.

What do you think?

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  • It depends on your relationship with the angel.

    If you're already buddies with the angel, start talking early. Reserve this for angels who will meet with you once-a-month no matter what you're up to.

    If you're not buddies and you have a monster intro ,you could still try to do angel development. Otherwise, wait to play the momentum game.

    Either way, send your pitch to AngelList: http://venturehacks.wufoo.com/forms/x7x3p9
  • Thanks Nivi, I appreciate your weighing in, and once again for creating a great resource over at Venture Hacks.
  • My thoughts, briefly (i.e. sans rationale):

    1. Once you start raising money, you need to set a time limit and push hard.
    2. It's OK to talk to people you already know remotely, but pitching -- as in a deck -- should never be done remotely. Totally different impact and feedback.
    3. Pitch a lot of people at once (see Venture Hacks blog for details.)
    4. Practice your pitch first with "friendly" Angels who can grok that you're "alpha-testing" your pitch. Meaning they'll be frank but can also forget the old pitch later. "Practice" isn't so much about memorizing text so much as getting solid answers to the important questions.
    5. The hardest money to get it person #1. After that it's actually quite easy, and in fact #1 might help you find those people. Angels & VCs are absolutely lemmings.
    6. In your deck, showing progress/learning is more important than predictions.
  • good stuff Jason, thanks for sharing your thoughts
  • Giff,

    This may be a matter of personal style and you may have already done this. Or it may be irrelevant depending on the size of the "seed" money you are pursuing. If so, I'll suggest it anyway for the benefit of your readers.

    I place a huge emphasis on the person. In other words, I'd be asking "who" before "when". I would try to identify 2-3 people I absolutely positively would want as a first investor in the deal based on their experience, industry knowledge, focus on a particular sector, reputation with other entrepreneurs, etc.

    I would then approach them and explain why I wanted to talk to them first.

    You would be surprised how rare this is - for entrepreneurs to really perform due diligence on seed investors to seek the right strategic match. It becomes shockingly obvious after spending time on the deal side.

    My guess is that this approach will mitigate any timing issues.
  • Thanks for the input Kevin. Yes, I have my short A list, most of which I know at this point, but a couple that I don't yet but am being introduced to by good people. My take has always been that it's a relationship you build, and that you don't start by talking about raising money at all but rather just getting feedback on the business. My view has been that if someone wants to bank on me and bank on the business, 2 weeks won't make a difference... it's the relationship building and showing progress that counts. It was interesting hearing the opinions to hold off and I thought that I would post about it in the spirit of transparency.
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