The “Why?” “When?” “How?” questions of raising money are enough to keep a founder awake at night. And the reasons why you might raise external funds are numerous- from acquiring inventory, hiring sales resources to marketing, and expanding the product.
And knowing when you’re ready to pitch to angels is an important discussion for you, any co-founders, and closest advisors to have. You might raise when you have proven to investors you can realize your vision or the opportunity has a market large enough to sustain a business. Investors may come into the business when you have identified and mitigated enough risks to invest their money.
“How much to raise?” is another question you might ask yourself on this journey. Ideally, you would raise enough to become profitable. And realistically, you would raise enough to reach the next unable milestone (~12-24 months). You can use forecasts to estimate how much to raise to get to the next milestone.
Another “how” question you will ask yourself as a founder is “How much am I giving up?” Well, that is dependent on structure. Dilution can range but in each round expect 10%-20% dilution of your founding shares.
As a founder, your time and energy is limited. Make sure you are investing your time in the right activities.
Our Resources to Help Founders
We have two resources for you to take advantage in determining whether or not your company is ready for angel investment.
The Angel Ready Checklist is a downloadable sheet to help you keep track of some criteria that angels use to assess an opportunity. Print this sheet to keep track of items when raising funds from angels!
The “Am I Angel Ready? Quiz” which will assess what stage you’re at and offer some suggestions about some potential next steps.
Interested in becoming an Angel Investor?
If the idea of joining a community of professionals and industry leaders, investing in innovating start-ups, and providing mentorship to promising entrepreneurs interests you, click here to learn more.