I see startup founders seeking out angel investors when they find VCs don’t respond to them or if they feel they’re too early for VCs. Chances are they might not have even worked their idea through.
Here’s how they go. “I’ve got a great idea and have filed for copyright. Now I am looking for an angel investor”. Scrape it a bit and you get what they mean – “ I am clueless how to raise the money. My mails to VCs didn’t get a response.” They don’t satisfy the VC criteria of developing a proof of concept, beta tested product or have any early customers willing to pay a price. By extension it means, “All I have is a pre-alpha prototype and I certainly don’t want to bet my money on it, leave alone my farm.”
In short, (s)he wants others to run the risk of investing in his/her barebones. VCs didn’t perk up. Somehow they think angels would.
I think it is borne out of a confused notion of what Angel investors are. Angels have wings and they roamed the skies as far as I know. Angels never walked the earth and they certainly don’t wear a badge. You just call someone an angel when (s)he touches you and get you out of distress. That would mean you recognize an angel after you are touched by it.
Now you draw a parallel and add the word “investor” to it. What do you get? A bunch of experienced investors who made a fortune for themselves from a combination of hard work, an innate astuteness and application of enormous intelligence they came to possess. They’re quick witted, have taken some early risks that got paid off. They are so shrewd that they see right through you from a mile. Would you think they will bet away their hard gotten resources or apply them without a thought? Get a life, folks!
That leaves the question – how to land an angel…
First, look closer home. Your family is the first band of angels. Try getting your dad interested. See if he’s willing to bet some money on your idea. Then try some of your relatives and close friends. Even if you score 6 on a scale of 10, you know you are investment grade. You clearly make the cut. Now look for people from the same industry, your teachers, professors – it might stoke their interest, you never know. If they’ve taken that road before, they would certainly appreciate your hard work and the value you carry. They will seize the opportunity if they think that they can add value and make it a hit. Word spreads. You may not hear a knock on your door just yet, but I suggest you leave it ajar.
Keep chipping away. Soon, you’ll sense a flash of bright light slipping through the door (or it could be your inbox) and you know you’re being touched.
Recognize the angel.