Finding Angels and Early Stage Investors

By: Christopher Mirabile, Chair Emeritus of Angel Capital Association and an early stage investor in Boston. He is the co-managing director of Launchpad Venture Group and the co-founder of angel portfolio management tool

 “How do I find investors?” is a perennial question, coming up regularly in many entrepreneurial contexts. Local entrepreneurs ask it all the time and it is certainly one of the questions I get asked most on Quora. Fortunately, for higher potential businesses going after reasonably large markets, finding investors willing to speak to you is not all that difficult. Yes, it is time-consuming and labor-intensive, but it is neither complex nor mysterious. Here’s how to go about it.

Prerequisite Concepts

Before diving in, you’ll want to refresh yourself on two prerequisite concepts. Both are covered in earlier articles in this column. The first is a discussion of networking basics for entrepreneurs. The second is an exploration of the advantages and disadvantages of working with solo angels and groups of angels (or angel funds).

Finding a Starting Point

The first step in finding investors is to build a candidate list. Whether you use your networking skills to ask around and manually build a list out of individual recommendations, or you use a directory such as the Angel Capital Association’s, you are looking to find angels in your general area. Locality is important because at the earliest stages of a company’s development, team is generally the most important investor evaluation criteria, and it is hard to assess a team if you cannot spend a little time with them in person.

With any list you develop, there will be some variation in terms of overall professionalism, transparency, efficiency, speed, and amount of money invested, but the ones you get by personal recommendation should have some assurance of quality, and the ones listed in ACA’s directory are all members in good standing, meaning they should  be somewhat serious about what they are doing.

How to Use Your List – Start By Narrowing Down

Once you have developed an exhaustive list of candidates, you will want to narrow it down with research. Go to the websites and look at the descriptions of the investor’s focus area and existing portfolio of companies. You want to eliminate organizations that do not invest in your kind of company, or beyond a certain radius – make sure you look beyond the high-level descriptions on the site – go to the portfolio page to note the inclusion/omission of companies in your space. There is no point in wasting your time or an investor’s time by applying to a funder who does not invest in your company’s sector. Take the time to weed your list down.

Next Look for Warm Leads

Once you’ve got a list of potentially relevant investors, start by looking for personal connections. If it is a fund, perhaps the investment team is listed on the website. If it is an angel group, you might find individual members or at least group leadership are listed on the page. You are looking for any individual who might serve as a gatekeeper or way into the organization.

Once you have your raw list of names, run each individual’s name through LinkedIn (yes, time-consuming, but a critical step in finding someone who might be able to spend some social capital on your behalf). Your goal is to find potential hits – first- or second-degree connections who might be able to introduce and vouch for you. At this stage it is invaluable to make a spreadsheet of connections to various groups for future reference.

If the organization has no people named on the site, then as a last resort just search the name of the organization itself and see if you can find any hits you can use. LinkedIn is not the easiest or most intuitive tool to use, but it’s probably the best for this kind of job. I do not maintain a premium membership on LinkedIn myself, but you might consider experimenting with at least a temporary upgrade to see if it makes all the wrangling and messaging more efficient.

Plan Your Outreach

Once you find the best connections to the organizations that are the best fit for your company, reach out to each individual in the most direct way possible. Having a first-degree contact who knows you reach out via LinkedIn to a first degree contact of theirs and vouch for you and pass along your request is obviously the gold standard of introductions. Second degree connections might work in some cases. If you can find an email address (they can be surprisingly easy to guess or otherwise obtain), the email approach is obviously an old standby. If neither is an option, @mentioning or direct messaging on Twitter, leaving blog comments, or even YouTube or Instagram comments might work in desperate situations.

Tailor Your Ask

Don’t ask for money. Ask for a short telephone call or a coffee to obtain a little advice on whether they think your “company is ready to raise” or some general “fundraising strategy advice.”  People flee from money requests, but they love to give advice and share opinions. The old chestnut applies here: ask for money you get advice; ask for advice you get money. Keep in mind that when you are talking to potential investors, you do not want to be dwelling on the product, you want to be talking about the overall opportunity.

Stay Organized to Be Responsive

Once you start your outreach, try to be organized with your information. You’ll want to track the date of any outreach and all responses back in a spreadsheet to ensure you don’t drop any balls. Ping each non-responsive person a minimum of two and a maximum of three times. Everyone is busy and receives a lot of correspondence; investors may get more than average. The second reason to stay organized is to make sure you don’t accidentally forget to reach out to, or, more importantly, get back to, someone you are communicating with. Lack of responsiveness is fatal in these situations – you may need luck to get some of an investor’s attention, so you do not want to squander it by dropping the ball.

Leverage Your Networking Skills to Close the Deal

Once you have an investor willing to give you advice, do what you can to make the most of the contact. Follow through on instructions. Ask for advice and thoughts on other people you should meet. Follow through on those introductions. Repeat as necessary, all while keeping your tracking sheet up to date so you can remember who introduced you to whom. Remember to circle back with short updates on your progress and important developments to the people who helped you out or showed you meaningful interest.

If you work through these steps, you may be surprised how many good contacts you can locate. And as you start to zero in on the right people, you will see signs of acceleration and amplification – one good contact can lead you to two better ones, and they in turn can lead you to several even better ones. Those may well lead to money. Once you feel the power of that effect, you will begin to understand the power of networking to find investors. As I said initially, it takes a little effort, but it is not complex or mysterious – anyone can master it and have great results.

Christopher Mirabile is the Chair Emeritus of Angel Capital Association and an early stage investor in Boston MA, USA. He is the co-managing director of Launchpad Venture Group and the co-founder of angel portfolio management tool