10 tips to improve your chances of raising Angel capital
Raising money from Angel investors is tough! This article provides a list of tips and techniques to help you improve your chances of securing investment dollars. You firstly have to create a broad list of well credentialed investors preferably with domain expertise in your area. You then need to methodically work through this list to identify the very best prospects for you to focus your time and effort on.
The tips below relate to a case study for an entrepreneur looking for investors for their EdTech start-up. The techniques apply to any domain area.
1. Use LinkedIn to zero in on experienced and well credentialed investors
- Go into Linked in and type in ‘Angel Investor Australia’ at time of writing there were 2,279 matches. A good start!
- Now let’s refine this ‘Angel Investor Sydney’ we get 758 matches.
- Now try ‘Sydney Angels’ – we get 140 hits.
- Finally let’s try ‘angel investor edtech’ – 251 matches
- All of the above searches have found prospective investors – now let’s use these broad lists to see is we can refine our search
2. Search any of the individuals uncovered above – you are looking for an EdTech company that they have already invested in – we are looking for an Angel who has invested already in a successful EdTech company
- Udemy – https://www.udemy.com/ - is one of the fastest growing EdTech company currently
- Now go to https://www.crunchbase.com/organization/udemy/investors- it provides a lot of detail on their funding history
- Take a look at their seed investors – they are Angel investors interested in EdTech startups! Worth approaching!
3. Go onto Angellist and search for EdTech - https://angel.co/education
- Query the EdTech companies and find out who has invested in them
4. Find a successful company in your category that has already achieved an exit – target the founders, investors and directors
- 3P Learning, the makers of Mathletics are now a listed company - http://www.asx.com.au/asx/statistics/announcements.do?by=asxCode&asxCode=3PL&timeframe=D&period=M6
- Identify the founders “3p learning founders” in Google and target them
- Identify directors of 3P learning – and target them
5. Use networking platforms to promote your offer – clearly identify your start-up in the Ed-Tech category
- Angellist - https://angel.co/
- OurCrowd - www.ourcrowd.com
- VentureCrowd - https://www.venturecrowd.com.au/
- Business Angels - https://businessangels.com.au/
- Australian Investment Network - https://www.australianinvestmentnetwork.com/
- You need a minimum of 500 connections
- You need at least 10 references
- Follow other successful companies in your field
7. Use LinkedIn InMail to target prospects
- LinkedIn Premium is well worth the investment
- You will have a good engagement rate from these approaches
8. Craft a short, well worded email which is unique for this investor
- Hi <Name>, Congratulations on the on-going success of <<EdTech company you are an investor in>>, I really like their <<unique value proposition>>. I’d like to spend 15 minutes with you on skype to seek your advice on our business. We are an EdTech startup focussed on <<value proposition>>. Thanks in advance for your help! <<Your name>>
9. If an investor says no to you – ask for 2-3 referrals
10. Stay in touch with prospective investors – sometimes the timing is not right
- Send a quarterly update to you investor long list so that they can see and track your progress
I have used these techniques many times and you will find they really help to improve your hit rate.
About Nick McNaughton
Nick has a long track record of helping to build and grow software and web companies, and has been a successful angel investor, business mentor, CEO & Fund Manager. Building on sixteen years of experience in bringing US software companies into the Pacific, Nick turned to personal and professional investment in domestic software companies in 1998. He specialises in web / mobile / cloud / SaaS and Enterprise opportunities. To date he has made seventeen Angel Investments losing his money five times. He has also had some wins including Vocus (ASX: VOC) & Soulmates Technology. He is currently invested in ImageBrief, ingogo, HeyYou & Windlab. Nick has been a Venture Fund manager since 2007 and currently is the CEO of ANU Connect Ventures a fund backed by MTAA Super. Nick has an Honours Degree in Computing in Business from The University Huddersfield in the UK, has an MBA from the University of South Australia and is a Graduate of the Australian Institute of Company Directors. He is a former Chair of Capital Angels, was a founding member of Sydney Angels, and currently sits on the Board of Entry29, a co-working space for Canberra start-ups.