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 Sharn Kandola, co-founder of feeDuck.
Raising capital is a major milestone for every young startup, and as with the other steps in your entrepreneurial journey, the more prepared you are upfront, the more successful you will be. If you’ve been searching up Angel investment advice, you’ll find a lot of tips online suggesting that in order to be successful, you’ll need to focus on building a relationship – and better yet, a friendship. And like with any good friendship, it needs to be built on trust. Here are some ways that you can build up that trust – and ultimately, a successful relationship.
Know your investor
Before any conversation with an Angel, do some of your own research. Many investors like to invest in themes so it’s good to learn about the types of companies already in your potentialinvestor’s portfolio. An investor may invest in eCommerce or Fashion on Fintech and that’s an important consideration when introducing yourself – especially if you aren’t a business that would be a natural fit. Most (good) investors want to guide and see a company succeed. However, if a company’s product or service lies outside an investor’s area of expertise, it likely won’t be a good fit. Additionally, it’s also a good idea to reach out to other companies who have worked closely with this Angel investor to learn about how involved the investor is, how much advice is given and what that person’s particular style is. As with any good relationship, there needs to be synchronization in personality and business style – and if you don’t do the research upfront, you’re bound to find yourself chasing after a potential investor (remember, you’re not a stalker).
Once you have a better idea of an Angel’s background and investment preferences, opportunities to meet or chat when it’s most convenient (for the Angel – not you!). Please don’t stalk them but know whether they’ll be at a conference or event, or meet them at other startup/entrepreneur events. Don’t be shy about sending out a cold email asking for a 30-minute phone call at the other’s convenience. Scour your LinkedIn (LNKD) connections to see if you can have someone in common who’d introduce you. And when you ask for an introduction, remember to be courteous and respect the individual. You never know, your connection may know others who may be interested in working with you. The most important thing to consider here is that if you are introduced to someone,do make the effort to meet them and share what you’re working on – never close any doors!
Be open to advice
I know you think your company is the greatest thing since sliced bread – and that is a very important thing. Without that passion and determination, your company won’t go anywhere but also
keep in mind that the advisors and investors you enlist have a set of experiences that can provide you with valuable insights and ideas that you may not be able to learn. Leveraging someone else’s experience is not only smart, but also very respectful to the investor and a big step towards building that trust.
Once you’re working with an Angel investor, take heed: it’s better to over-communicate than under-communicate. Be sure to share milestones, updates and pitfalls regularly so this person (who has taken a bet on your success by the way) is in the loop. Work with your Angel to learn about how they prefer to work with you. This could mean scheduling monthly face-to-face meetings, weekly calls, regular emails – whatever works for your partnership and for your stage of business.
Don’t play around
At the end of the day, the most important thing is that there is transparency. If your presentation isn’t ready when expected, do let your advisor know. If things are getting a little crazy
and perhaps unravelling, let your advisor know. If you didn’t hit the financial targets you were targeting, lay it all out in black and white. Again, it all comes down to respect – you have an advisor who is willing to go shoulder to shoulder with you and has put their money where their mouth is. Don’t forget that and be upfront about what’s happening with their investment.
Contrary to your beliefs, it’s not all about you and your business (believe it or not!). Sometimes, enthusiastic startup founders forget that investors are people, too. Busy, hardworking professionals with families, personal lives and a passion for working with new companies to help them on their paths. Don’t just look at them as money bags – a smart entrepreneur sees the importance of building relationships and understands that investor partnerships are invaluable.