Securing investment for an early-stage startup can be a daunting task, especially in the post-pandemic landscape. This challenge is even more pronounced for B2C startups, and female or diverse founders often face additional obstacles. In fact, female entrepreneurs in Europe received a mere 0.9% of the total investment capital in 2022. The question that arises for founders is: how can they raise capital in such a risk-averse environment?
Key Takeaway
Raising a substantial round with angel investors can be a viable alternative to VCs, especially in uncertain times. Angel investors are often more confident and willing to take risks in early-stage ventures. By utilizing the right tools, implementing a CRM system, and crafting a compelling blurb, startups can increase their chances of securing funding from angel investors. It’s important for founders to recognize the value that angel investors can bring beyond capital, including their experience, networks, and moral support.
VCs versus Angel Investors
While venture capitalists (VCs) thrive on risk, they tend to be cautious during downturns or uncertain times. With recent global events like the Ukraine war, market crashes, and inflation, VCs tend to favor familiar territory, such as investing in established, late-stage businesses led by male founders. However, there is still hope for startups looking to raise substantial funds before the year ends: angel investors.
The Benefits of Angel Investors
Angel investors are often more confident and willing to take risks compared to VC firms. They have typically been through the ups and downs of building companies themselves and have weathered fluctuating markets. They understand that early-stage ventures can present unique opportunities for growth and success, even in uncertain times.
Strategies for Raising a Substantial Round with Angel Investors
As the founder of a female-run circular marketplace that recently raised a $2.85 million seed round, I have experienced firsthand the power of angel investors. Here are my tips for raising a substantial round exclusively with angel investors:
1. Use the Right Tools
Having the right tools at your disposal is crucial when connecting with potential angel investors. Consider investing in a LinkedIn Sales Navigator Core subscription, which provides unlimited messaging capabilities. This allows you to reach out to potential investors directly. Additionally, leverage resources like Crunchbase to identify investors who have shown interest in companies similar to yours.
2. Implement a CRM System
A robust customer relationship management (CRM) system is essential for managing your conversations with angel investors. Whether you choose a dedicated CRM platform or a simpler solution like Notion, having a system in place to track conversations, investor preferences, and progress is vital. Organize your CRM in a way that aligns with the different stages of the conversation, allowing you to stay on top of your interactions.
3. Craft a Compelling Blurb
When reaching out to potential angel investors, it’s important to have a concise and compelling blurb about your startup. Keep it to two or three sentences maximum and include links to any published articles about your company. Make sure the message is clear and easily understandable, highlighting the investment opportunity you’re offering.
