Raising Money from Angels, Pt. 1
Getting money from angels is slightly different than accepting checks from VC firms. Here are questions to ask angels before putting them on your cap table.
Angel investors are wealthy individuals who have a passion for specific types of companies or are interested in backing a particular founder they believe in. Often, they’re industry executives that can provide more hands-on guidance and make industry-relevant connections for startups.
While angels can be great for the value they bring, raising money from them often means you’re taking on a lot more smaller checks, answering a lot more emails and consistently updating your shareholders.
Before taking angel money, here are a few questions to ask your potential angels:
What check sizes do you typically write?
What size check are you prepared to invest in my company?
Will you lead my round and set the terms?
Will you follow on in further financing rounds?
Do you expect pro-rata rights?
Do you have any percentage allocation you're targeting?
Are there any special terms you require?
Can you share a term sheet you've used previously so I can get an idea of the terms that are typical for your investments?
What is your due diligence process?
What paperwork will you need me to provide to you?
Do you expect a full data room; or just a deck and financials?
What needs to be true for you to write a check?
What time horizon do you typically look for in investments?
What is your criteria for an investment to be "successful"?
Have you invested in anything previously?
What did you invest in?
What have you liked about those founders/companies post-investment? How they communicate after you write a check? Etc.
Would the founders you've worked with be a reference for you?
Do you have other angels in your network that you co-invest with that you would be willing to introduce me to?
Do you typically take and expect a board seat with voting rights? Board observer seat?
How do you help your companies post-investment?
What is the best way for us to communicate on an on-going basis if you do invest?
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