When I started angel investing, there were venture capitalists, and angel investors. VCs were the “professional” money that was usually provided by someone else and Angels were the “novice” money and were provided by the investor himself.
VCs had access to larger amounts of capital and were the go to group for later stage funding. While there are many more angel investors by headcount, their investments are smaller.
Startups approached angel investors in the early stage because most VCs wanted to see more traction and there were usually angels in one’s network.
Today, the world of startup investing is quite different primarily because of the rise of the internet and the shift of practically every business function online. Five years ago, I had a startup complain to me that they could run every function of their business (sales, marketing, finance, etc) online except fundraising. For angel funding they had to make the rounds of the local angel networks. They had to meet investors in the coffee shop to progress the raise.
As the world increasingly moves online so too does the fundraise. Today there are numerous sites that let the startup access investors. I receive calls daily from startups across the US (and increasingly Europe) wanting to access my investor network.
An established startup that has raised some funding already, now expands the fundraise to include other networks across country. In fact, it’s an exercise of funding investor networks online and engaging them as part of the overall fundraise process.
I tell startups they need to have a fundraise strategy that goes national from day one. It helps greatly to have some funding from your local community. If your message to the investor networks is that no one in your local community would invest, then this will be a difficult raise. It’s best to show up with some funds raised.
Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies