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5 Tips for Connecting With Wealthy Investors

Group of business people meeting in restaurantGroup of business people meeting in restaurant

The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What’s the best way for young startup owners to develop relationships with angel investors?” is written by Promise Phelon, CEO of TapInfluence.

Building a network of angel investors is crucial to building a business. Angels tend to be wealthy individuals, former executives, or entrepreneurs themselves who desire to work with smart, fresh talent. They rely heavily on their instincts, industry experience, and connections they make with other startup founders to invest in new businesses when institutional investors won’t.

Angel investors are investing in you and your idea. It’s as much business-driven as it is relationship-driven. For you, they provide amazing learning opportunities: how to manage a board, develop communication skills, and present your business in the context of risk and return.

I’ve raised angel rounds several times in the last 15 years, and the number one piece of advice I received is the concept of “two-in-a-box.” This basically means to ask your investors if there’s someone else they trust who should take a look at your deal. If your idea is strong and your story is tight, you’ll likely end up with two investors. And some of those early investors will be with you for the long haul, investing in you down the road, just as I experienced in leading TapInfluence’s latest fundraising just last month. These relationships are some of the most rewarding you’ll cultivate in your professional life, so first impressions are paramount. You need to have your pitch down cold, and a deep passion for what you’re doing.

Here are some recommendations for where to start:

Prove you have skin in the game
When talking to potential angels, be prepared to discuss your entrepreneurial journey and your personal investments. Use your story to demonstrate that you understand what you need to grow and how you plan to manage business finances. Not only will this kind of storytelling help you develop a personal connection, it’ll also demonstrate that you truly have skin in the game.

See also: What the Most Successful Entrepreneurs Get Right About Angel Investors

Talk with family and friends
Your immediate network of family, friends, and colleagues are the easiest group to turn to first. Assuming they have the financial means, these close connections are most likely to be excited about investing in your future, and most are a good source of recommendations for other potential investors.

Connect with entrepreneurs you respect
You’d be surprised how many entrepreneurs are interested in helping someone else’s startup develop into a successful business. Entrepreneur-turned-angels have built and sold a company or two. They have been in your position and appreciate what you’re going through. Identify a few whose stories resonate with you and reach out.

Leverage service providers
Important service providers—such as lawyers, accountants, or bankers—are great sources of introductions. If you’re like me, you’re already talking deeply about your business, so bringing up an angel round is a no-brainer. These providers have other business clients and can introduce you to those they think are a good fit.

 

Tap into angel investor networks
Local groups and online communities exist today to help you expand your options and connect with wealthy investors. Many angel networks focus on specific industries or local entrepreneurs. Some are big firms, while others simply facilitate connections between startups and private investors. Put in a little work to research and join the angel networks best suited for your business.

I guarantee you two things: You’ll likely explore all of the above (and more), and you will hear the word “no” more than you ever thought possible. That’s normal. If your business means to you what mine have meant to me, you’ll never stop making connections and building relationships. Eventually you’ll tell your story to the right person and from there, the sky’s the limit.