As an entrepreneur you should be primarily focused on building two things: One is an awesome product. The other is great relationships.
If you build something awesome and get people using it, you may not even need to “find” angel investors. They will find you.
But don’t wait for that. You’ll be ahead of the game if you’ve already started building relationships with some quality angel investors. Begin by meeting as many angels as you can, through connections, introductions and mentorship. Accelerators (I run Techstars) can be a great way to help new companies get exposure and funding.
As time goes on, focus on a few well-connected investors who show an interest in your company, and develop a deeper relationship over time. Don’t think of any initial contact as a “pitch for yes or no.” Think of it as “start building a relationship.” So, you never want to ask for money right away. When you do make a request, ask for advice. Even then, don’t overdo it. Always begin with a‘small ask.’
What is a small ask? We are talking about very busy people here, and time is their most precious commodity. If they’re willing to help you out, show that you respect their time by asking for just one thing, via email, so they can get back to you on their own schedule.
Asking too much right away can put a quick end to a potential relationship. Start small and build up from there. Mark Suster wrote a great post called Invest in Lines, not Dots, in which he talks about the importance of building relationships with investors. The first time you interact with someone, you are a “dot.” This person has no reference point or sense of where you came from or where you’re going. It takes time and many interactions before the “dots” connect and you become a “line” to them. Keep in mind that the investor is going to observe the direction and velocity of that line.
Build on that first interaction by telling the investor what you hope to achieve by the next time you contact them. Engage them in a feedback loop as you build your product. Keep the investor updated through a series of emails, phone calls and brief meetings.
These short interactions allow you to gradually develop the relationship so that over time the investor can see if you are making progress and gauge how you respond to adversity and setbacks. At the same time, this gives you a chance to get to know the investor. In your quest to secure funding for your business, don’t overlook the importance of getting to know this person who will own a part of your company.
Once you have that first investor or two, you can ask them to help you put the round together. They can promote you on a site like AngelList and to their close connections, which will show other investors that you have some activity and interest. Remember that angel investing is a social sport, and you want to get your supporters using their networks. Just a few early supporters can put you over the tipping point and help your startup really take off. As with most things in business, quality trumps quantity with angel investors.
Build real relationships with angel investors, and build something awesome. The rest will take care of itself.
This post recently appeared on The Accelerators at the Wall Street Journal, where startup mentors discuss strategies and challenges of creating a new business.