Raising Startup Funding From London Angels

This post originally appeared in Disrupts magazine.

Between bootstrapping your startup and VC funding you’re probably going to need to raise some money. While a seed fund might give you £300/£400k at once, most startups need to raise some angel money.

There’re many great articles online about angels and what founders can expect, a recent piece by Mark Suster of Upfront Ventures for example. However, they’re typically written from a Silicon Valley perspective, which may give London startups unrealistic expectations about valuation, investor involvement and investment size.

Valley angels have typically been founders or early-stage employees of tech businesses that achieved successful exits. They’re younger, richer and less risk-averse than London angels. They understand tech startups and are more likely to have a niche they understand and focus on.

London angels are often financiers, lawyers and accountants. Many have sold businesses, but often to retire. They’re much less likely to understand current technology and may want to invest smaller amounts as part of a syndicate. Many are retired and have generalist portfolios of companies across many sectors; they’re probably not going to be helping out much day to day, and you’re unlikely to get more than £50k from an individual angel (and usually much less).

A seed stage company’s three year projections are likely to be irrelevant in California, yet many London-based angels will expect to see them and you need to have an explanation for why they aren’t meaningful for your company. At one recent pitch event the conversation descended into a discussion of the year-end dates for the three-year projections; at another event, no one noticed that the online demo didn’t work since they didn’t try it.

To summarise, there’s plenty of money available in London today, but when approaching angel networks you can’t assume Silicon Valley levels of background knowledge and should plan accordingly to successfully close your round.