5 Rules for Building a Great Relationship With an Angel Investor

June 13, 2016, 1:00 AM UTC
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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 Rohan Ayyar, project manager at E2M solutions.

When you are bursting with energy to start your venture and preening yourself for investor pitching, money may be the biggest thing on your mind. However, getting the benevolent investor to back your startup is just half the battle. What about after the party is over and the last bottle of bubbly has been downed?

The real challenge comes in keeping your angels happy and growing with you, never forgetting that they want much more than their money back. They want to be wowed. They want to know if they have backed the right people and the right business. How can you reassure them? By developing a strong professional relationship right off the bat. Here are a few ways to do that.

1. Keep them in the loop

“I’m encouraging companies to think about indicators of their operation performance, which they could disclose more regularly (…) allowing investors to become comfortable with long-term performance.”Diane Smith-Gander, chair of Broadspectrum and director of Wesfarmers

Investors often get peeved that founders are not as forthcoming about updates as they ought to be. Nothing vexes an investor more than not hearing from founders and having to constantly chase them for the latest charts or figures.


If it is too soon and you do not have any solid progress or achievements to share, keep your investors posted with a short email on how work is coming along on a specific task/milestone or what you are planning over the next few weeks.

Angel investors know that you can’t check off an objective a week, but a monthly report (even if it’s bad news) will serve to build trust between parties who are just beginning a relationship that is fundamentally based on money. It will cement your image in the investor’s mind as a reliable and hardworking founder who takes his own business seriously. And it will make that much easier for you to ask for more funds and justify their allocation down the line.

2. Be a lion

“Lambs constantly pivot, lions frequently persevere.”— Jason Calacanis, serial entrepreneur and angel investor

Jason Calacanis wrote an excellent post in which he divided entrepreneurs into “lambs” and “lions.” According to him, lambs focus on “social proof,” like presenting their startup on WebSummit or TechCrunch Disrupt, or giving TEDx (which Jason calls “TED for losers”) talks. They are constantly meeting with their investors but with no solid reports.

On the other hand, lions will postpone meetings as much as possible until they have all their metrics, business model and growth channels figured out to a tee. Then, they will send a concise report minus the mumbo-jumbo, which leaves the investor with only one decision to make: when to release the money.

If you want to be among the latter, talk about your customer acquisition cost, churn, loan-to-value ratio and daily active users, not the fluff that fails to move the needle.

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3. Value their inputs (with a pinch of salt)

“Investors need reassurance, not to be involved in a deep dive.”— Chris Yeh, avid startup investor and advisor

Whether you’ve taken money from your mom, neighbor or a serial investor, whether they’ve invested $100 or $1 million, value their inputs. By that, I don’t mean letting them make all the decisions for you, but from time to time, it will do you good to ask them for their views on a hire here or feature change there, especially if they’ve also invested in other businesses similar to yours.

An investor’s job goes beyond signing under the dotted line. When you proactively solicit their opinions, they feel validated. They know what challenges you are facing and better understand your approach to coping with them, which ultimately bolsters their confidence in your business and paves the way for a long-term relationship. As Armando Christian Perez, a.k.a. the rapper Pitbull, says, “Ask for money, get advice. Ask for advice, get money twice.”

Serial investors often have tremendous experience of how startups, funding and markets work. Their guidance can work wonders for you and if you can read between the lines, your odds of success improve drastically. An enthusiastic investor is the next best thing to an accelerator program.

Warning: As your business grows and you seek investment from more than one angel, you’ll invite a lot of conflicting advice and “strong” suggestions, and so, you need to master the art of polite refusal.

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4. Feed their passions and priorities

“Angel investors can have romantic reasons for investing.” – Yuval Tal, founder & CEO of Payoneer

Yuval Tal emphasizes the importance of getting the investor to like you and make them feel they’re on an equal footing with you. Find out what your angel investors are passionate about and what is they’re looking for exactly (these two things differ quite often).

For example, Susan McPherson, an influential angel investor, has backed startups like TheLi.st, Lover.ly, Zady and The Muse especially because they had women she believed in at the helm. Susan chose angel investing over safer investment opportunities like bonds and stocks because of her passion for women’s issues and CSR.

Is it a cause, your grit, or innovative ideas that brought your angel on board? Whatever the reason, underline the fact that you are still chasing that dream with the same level of passion, even after 100, 365 or 1,000 days.

Related: 15 Things to Do When You’re Feeling Stressed

5. Help them grow

“I did win at angel investing. Barely, and I did it with a ton of advantages you probably don’t have. And even I’m getting out, because I know so much of my success was luck.” – Tucker Max, former investor

Most angel investors start small by investing in friends or family. Some of them win big and go on to become famous or seasoned VCs, others silently give up the game. Tucker Max’s first angel investment happened by chance. We have many such examples, especially in recent years, as everyone and their nanny is eager to invest in the next Facebook.

As your business grows, you have to help your investors grow with you. Acquaint them with best practices, share important news (related or unrelated to your business), and most importantly, help them meet other startup owners where they can invest. As your angel investor grows with you, you will have a more rewarding relationship; nothing is better than having an informed, experienced and in-the-market investor backing you.

As with any relationship, there’s no single best way for a business owner to keep investors happy, but sustained, small and thoughtful actions will keep the synergy flowing and the startup growing.

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