As a founder, raising money from angel investors can be a daunting process, but there are steps you can take to make it smoother, and we here at Cherub are here to help. Here are our top tips on how to create great relationships with angel investors.
What is the difference between an angel investor and venture capitalist?
Angel investors are high net worth private investors focused on financing small business ventures in exchange for equity. Unlike a venture capital firm that uses an investment fund, angels use their own money. Compared to venture capitalists, angels may also be more patient with entrepreneurs and open to providing smaller dollar amounts for a longer time period. But they do want to see an exit strategy at some point where they can pocket their profits, typically through a public offering or an acquisition.
As a founder, raising money from Angel Investors can be a daunting process, but there are steps you can take to make it smoother, and we here at Cherub are here to help! First things first, the good news is angel investors are going to be fans of your business, they are typically investing in things they are passionate about or have some experience in. That being said here are our top tips on how to create great relationships with angel investors:
1. Build relationships: Networking should be a priority for any founder. Meet your matches here on Cherub, and don’t be scared to start a conversation. With Cherub, you are getting a warm intro as they have already expressed interest in your business. Relationships are key in the world of fundraising. It’s important to know that these things take time.
2. Be prepared: Before approaching angel investors, make sure you have a solid pitch deck and a clear understanding of your company's financials. Investors want to see that you have a comprehensive plan in place and that you know your business inside and out.
3. Focus on value: Investors are looking for companies that offer value, either through their products or services. Make sure you emphasize the value you bring to the market and how you plan to differentiate yourself from competitors. Also pay attention to your shared values with potential angels as this will help create a bond over the business.
4. Don't be afraid to negotiate: Fundraising is a negotiation process, so don't be afraid to push back on terms that don't align with your goals. All of this is normal and part of the conversation – but be willing to walk away if the deal isn't a good fit for your company.
5. Follow up, follow up, follow up: After meeting with potential angel investors, make sure to follow up promptly and continue building those relationships. Keep investors updated on your progress and milestones, even if they don't invest in your company right away. And the good news is, you can do that all on Cherub!