The Angel on Your Shoulder

By Megan Rychwa, Investor Research Analyst, LSN

Anyone embroiled in early-stage fundraising understands the need for solid advice and warm introductions, especially when approaching angel investors and family offices – your own shoulder angel to guide your progress. These investor groups are popular at Redefining Early Stage Investments (RESI) conferences because they offer insights to founders on how to connect and engage with these types of investors.

When it comes to approaching family offices and angels, your network is everything. Faz Bashi of Life Science Angels said at RESI June 2021 “BYNBYNI – build your network before you need it.” As a life science start-up, getting to know the members within an angel group or family office, connecting via LinkedIn, going to events hosted by the angel group or family office and conferences like RESI, and building your network before even asking for money is going to set you apart from other startups. When you are known within the networks, the angels will talk to one another and can provide referrals and deal flow, giving you a warm call to the investor you want to meet with. Cold calls are not an efficient way to connect with investors in general, but especially not with angels and family offices. The gatekeepers may turn you down before you can even pitch your company.

Many angels and family offices have a vast network, and Charles Cameron of Hub Angels Investment Group told his panel at RESI September 2021 that if you cannot get a referral through the network, you are not connected and you are not the right person for the job. Since COVID, your network is even more critical, and you want to be well-connected before even thinking about raising money. Charles explained, “Use the network, get a referral in, do it early, early, and often. I love when people keep me updated before they need the money… Here is an update on the company and I have watched them over time, and you suddenly are building a relationship with that person of trust and insight.” Find a contact and get into the network of angels and family offices you are targeting, and keep people informed on your company’s technology and successes and do it before you need money, so you are already well-known and trusted.

Another key factor in approaching angels and family offices is preparedness. The investors within these groups do a lot of due diligence and research on your company, they ask you to do the same. When approaching an investor, going on their website can make you as an entrepreneur stand out; know their investment criteria, know their portfolio companies, and keep up-to-date with the latest news on the group. Nadav Shimoni of Arkin Holdings said at RESI June 2021 that he expects entrepreneurs to go through their website and portfolio and come to the table saying, “I know this is the type of technologies that get you excited because you’ve invested in it, I really like this blog post you’ve shared, and we are doing something similar.” This shows that they are diligent in the process and will be diligent as a company.

Some angel and family office groups, such as MidAtlantic Bio Angels, have office hours where, before asking for any money at all, a startup can come in with an idea or the preliminary stages of their company and pitch to investors for feedback and advice, so they are ready for the future when they are pitching for money. Doing this builds a relationship within the group early on and if that relationship continues throughout the preliminary stages of the company, that trust has been built and maintained which helps get to the investment stage much easier through connections and networking.

Building your network is the key to success with connecting with angels and family offices, and events like RESI make doing that easier than ever before. When you have built a solid network, that foundation gives your company a lot more credibility and trustworthiness to investors who invest out of their own pockets. Let these principles guide your outreach like a shoulder angel so you can be ready when the real ones come knocking.