Finding your Guardian Angel: Optimizing Engagement with Angel Investors
Angel investors can be a critical element of funding your earliest days as a founder and can provide incredible value for your business. But, who should you choose to work with? How can you engage early stage investors to secure the most value? And, how should you continue to engage investors to stay on their radar, build your network and deepen your relationships?
To help you improve your odds of getting funding and build valuable relationships that will nurture your growth, we sat down with Zécca Lehn. Zécca is a General Partner at Responsibly Ventures where he supports pre-seed sustainability and social good focused startups.
Be selective when choosing early stage investors
Don’t just take whatever money you can get. Even at this stage, you should be thoughtful about who you involve. Make sure they align with the near-term and long-term goals of your business, whether that is expanding your network, bringing additional capital on board, or getting access to a promising accelerator program. Angel investors bring more than just funds, they can also provide a variety of value for your growth at this crucial early stage. Don’t select investors just because they believe in you and will cut you a check; also carefully assess what other value they can bring to the table.
Engage each investor differently
Just as each investor will provide a different value to your business, so too should your approach to each be different. Assess how they want to be involved and how much time they want to give. Some will want to be as involved as you will let them while others will prefer to be more hands-off. Spend the time to get to know them, what their passion is when it comes to angel investing, why they are excited about your business and how they want to contribute. Everyone has something unique to offer; it's your job as a founder to engage them one-by-one and draw out the most value for your business.
Send regular newsletters to keep investors in the loop
Don’t make the mistake many early stage founders do by skipping regular updates to your investors. If done well, regular written updates keep your investors and partners informed, get you timely support with issues, and enable you to raise follow-on funding, grow your sales, or build key partnerships.
How often you send updates will be unique to your business and investor community. However, a good rule of thumb is monthly updates until you close your seed round, and then shifting to a quarterly cadence.
While you should assess what is most important to communicate in your updates, you should likely include these four topics no matter what:
- Capital — Are you actively looking for money? Are you currently raising? How much are you raising and how much have you already raised?
- Product — If your business is product-driven: What have you built? What is next? What are you excited about? What isn’t working?
- Traction — Your measure of traction will be unique to your business. It could be LOIs signed, customers secured, month-over-month revenue growth or just what grants you have won or are applying for. For hardware companies with long R&D lifecycles, any way you can demonstrate forward movement will be important.
- Team — Have you hired new people? How have you grown as a team? What are you excited about?
Also consider other topics that are important to your business. For example, a marketing update (e.g. features in the press).
Your relationship with investors is a two-way street
Founders often make the mistake of viewing their relationships with investors as one way (i.e. an investor gives you money and provides value, end of story). But, you provide value to investors as well. You can bring them deal flow, new LPs, and help them understand trends and even be a sounding board for potential deals. This can help build your network, deepen your relationships and give you credibility. Embrace this role to get the most value out of your very early stage rounds.
Additionally, keep in mind that investors have to keep up with many founders. If you don’t actively keep yourself on their radar, you are likely to fall through the cracks. If you believe that a particular angel investor might bring you a ton of value down the line, invest in the relationship accordingly: participate in any events they organize, engage them on social media, etc. A constant “drip campaign” of involvement can go a long way in building long-term durable relationships with angels (and other investors).
Zécca J. Lehn is the General Partner of Responsibly Ventures, based in California, backing U.S. PreSeed startups in both Social and Sustainable Tech—using multiple UN Sustainable Development Goals (SDGs) as a guidepost per investment. Over the past 15+ years, he has worked as an Environmental Economist, Data Scientist, Non-Profit Board Member, and Co-Founder. For the past years, he has also produced the podcast posi2ive, and published numerous articles on Venture Scale Positive Impacts. He also leads regular community events for their current base of 10k+ members across platforms.