Founders + Funders: Angel Investing Advice and Resources

Published in

All Raise

7 min readFeb 17, 2021

Angels play a critical role in the startup innovation ecosystem. If you’re a founder, you should know who they are, where to find them, and how they think. And, if you are interested in becoming an angel investor yourself, you might be looking for resources as you figure out how to get started.

The Boston chapter of All Raise recently hosted an interactive, informal session with some of Boston’s own angels to discuss. (You can watch the video here.) We also put together this blog post to share additional resources and recap the event in an easily consumable format. I myself had the opportunity to moderate the conversation with these amazing women:

Betty Francisco, Co-Founder at Amply Latinx | Latina Circle
Jean Hammond, General Partner at LearnLaunch Accelerator
Jodi Collier, Executive Director, Launchpad Venture Group
Olu Ibrahim, Founder & Executive Director at Kids in Tech

Here are some of the key takeaways and resources we covered.

What is an angel investor?

Angel investors provide capital for startups, usually in exchange for convertible debt or ownership equity. Angel investors typically support startups at the earliest stages when most investors are not prepared to back them. Angels in angel groups also often do later ‘seed’ level deals for early growth capital.

Why should you consider becoming an angel investor?

Angel investing is a great way to diversify your investment portfolio beyond traditional stocks and bonds and build long term wealth. There are many additional benefits to angel investing beyond the potential financial returns.

Supporting companies at the earliest stages is exhilarating. You’re meeting with passionate and brilliant people while expanding your network and leveraging your unique skill set to bring your expertise to these companies. Jean Hammond says she enjoys it because she loves thinking about complex problems, getting into business issues, and not just doing one thing. She was also attracted to angel investing for the opportunity to work with fascinating, different, and fun people — and mostly women entrepreneurs.

You can also learn new skills that can help accelerate your career or help you build your personal brand, leading to incredible opportunities like press or serving on boards.

How do you become an angel investor?

Jean shared that she got into investing by accident. She was approached by a friend who needed funding for his startup, and after investing she found that she enjoyed helping founders get their businesses off the ground. Her background as an operator gave her insight as an angel. Panelist Olu Ibrahim echoed Jean’s sentiment. Her investor friends thought she’d make a great investor based on her academic and professional experiences as the Founder & Executive Director at Kids in Tech. Also, there is a significant need for more women of color in the investment community, and that mission resonated with Olu.

What should you know if you’re considering becoming an angel?

First, you need to be an accredited investor — more information on what that means here.

Betty Francisco suggests dipping your toes into angel investing by joining or creating a group like Pipeline Angels. She noted that investing together is an excellent form of de-risking. Groups create an environment where you do not have to put a lot at stake at the start of your angel investing career. It puts you in space with other angels and allows you to immerse yourself in a setting with deal-flow versus having to seek out and vet deals independently.

What types of angel groups exist?

Some angel groups exist around different interests, timing, and risk profiles, and some have other operating procedures and investment principles. Some groups decide to invest after taking a vote from the group, and if sufficient interest, make one investment from the entire group; this is called “writing one check.” Others are federations, in that individual angels make their own decisions, like Launchpad Venture Group, where panelist Jodi Collier is Executive Director. Many angel groups coalesce around a specific industry (e.g., clean energy) or have requirements (e.g., female or BIPOC founders).

There is typically an evaluation process usually published on the group’s website. Most groups have rules for their angels, such as minimum check size per deal (e.g., TBD Angels, a new group mostly of younger angels, has $2,500; Launchpad has $10,000).

Jodi mentioned that Launchpad, probably the largest angel group in New England, has paid staff and on-going programming expenses, so they charge annual membership dues to offset their costs.

Be sure to understand how different groups manage risk. For example, Launchpad only invests in local companies so that the group can meet entrepreneurs in person. While GoldenSeeds works with companies all around the country.

What if I want to invest independently?

You can. Not all angels are part of a group; many are independent, following their noses around sectors and topics where they feel they have the professional expertise to better judge the opportunities and know they can be useful to the founder.

I’m a founder, and I’d like to approach some angels for funding. How do I get started?

The first place you should start is within your network. Betty Francisco gave this advice, “Many women and women of color particularly do not have large social networks to access capital to kickstart their business. Be sure to talk to other entrepreneurs who’ve been funded. Ask them how they secured their funding. Do not discount alumni networks or your professional networks you’re a member of.”

The second place to look is at the investor groups we’ve linked to below.

What are angel investors looking for when considering which investments to make?

“Most angels are interested in investing in companies that will be headed towards a later round with the venture capital community. Consider them a gateway to a future funding round so you need to think ahead to the requirements for that round,” Jean Hammond explained during our session.

Any tips for how to best pitch an angel investor?

“When we look at startups, we just see a big pile of risk. Your job is to reduce risk: “Here’s how I added to my team,” “Here’s what potential customers told us about this product,” etc. Acknowledge the unknowns and then dismantle them.”Also if they ask a negative question … tell them a positive (how big it can be) answer,” Jean Hammond recommended.

Betty’s advice is to “know what your exit might look like. I always try to think, what would be the exit for this company?”

Do you have any advice about determining whether an angel is a good fit for my company?

Olu’s advice is to “be careful about who the potential investors are and evaluate them on the level of respect, trust, and personality fit. Good investors not only give capital but also coach you. It’s a long game, kind of like dating!”

Betty echoed this sentiment and noted that the right investors bring “more than capital, there is also value in the partners they bring. You want smart capital, the expertise, and the social network that comes with the partnership. I will not invest in something unless I can add value. In many investments, I have some connection to what they are doing to open some doors like bringing in needed expertise or helping grow a new line of business or revenue area.”

What size checks do angel investors typically write?

Jodi said, “people come to us for a priced round around $1M, the first tranche of funds to hit milestones.” but Jean notes that $250–500K is a more typical amount you might raise in an angel round, which is good because many firms aren’t ready to put $1M to work yet.” So, it varies by angel and angel group.

When do angels expect their money back?

Three to five years is a typical timeline. Angels follow the money all the way through and don’t expect to be bought out by incoming investors. Angels do see a lot of deals ending up in corporate M&A vs. IPO exits.

Some investors like Betty have a bit longer timeline. She has a five to seven-year exit window because she invests in life sciences. She notes, “life sciences have a long commercialization period, so you will be in that longer frame if that’s your field.”

Resources for Entrepreneurs and Angels

There’s never been a better time to explore angel investing, both for founders and funders. For aspiring funders, angel investing is a great vehicle to increase your wealth, grow your network, expand your skillset, and get involved to influence a new generation of entrepreneurs. Angel investing knowledge is of equal importance to founders. Angels often have years of deep expertise to help you as you navigate scaling your business, managing organizational challenges, and raising subsequent rounds.

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Founders + Funders: Angel Investing Advice and Resources

Written by Veronica