Eight Ways to Unexpectedly Turn Off Angel Investors
As an active angel investor and co-founder of the MergeLane accelerator and fund for high-growth startups with at least one woman in leadership, I only invest in about 1% of the angel investments I see. I can’t possibly get to know every company that comes across my desk, so as I weed out candidate investments, I look for patterns and small things that could be a warning sign of much bigger issues. There are a few seemingly benign things that entrepreneurs do that lead me to pass more quickly. I asked a few other angel investors, and they seem to be turned off by these things as well. I’ve put together a quick list to help entrepreneurs avoid the unexpected angel investor turnoffs and to give angel investors a few quick things to look for.
- Ridiculously off-brand email / LinkedIn profile photos: The picture in this post is the actual LinkedIn photo of the founder of one of my favorite investments, Shinesty. It couldn’t be more perfect for the CEO of Shinesty — a company that sells outrageous clothing for theme parties, costume parties, and general ridiculousness. However, it probably isn’t the best choice for most other startup CEOs. Profile pictures are important reflections of individual and company brands. The Google profile photo seems to be the detail forgotten most frequently. While it may not seem like a big deal, it’s kind of hard to take an email from a cyber security CEO pictured taking a bong hit seriously (true story).
- Outdated LinkedIn profiles: Since most angel investors look for entrepreneurs who are 100% committed to their startup, having a LinkedIn profile that reflects that is important. It always gives me pause when entrepreneurs list a full-time job as their current employment or several other part-time commitments.
- An outdated or lack of startup directory profile: Some investors routinely search for opportunities on sites like AngelList or gust.com. Investors also check startup directory sites to find out more before accepting a meeting request. There are dozens of directory sites. At a minimum, I’d recommend setting up a CrunchBase and an AngelList profile. You can check out my previous post on what every AngelList profile should include. More importantly, if you’ve set up a profile on any platform, make sure it is up-to-date.
- Sending huge files by email: I occasionally receive pitch decks and other documents that are more than 20 MB by email. This is extremely annoying. It’s impossible to open a deck that size from mobile — something crucial for many investors who spend most of their day in meetings. I’ve also noticed that some investors have their email set up to reject files over a certain size. I’d say that any document over 5 MB should be condensed before sending to investors.
- Scanned legal documents: When entrepreneurs send scanned versions of paper legal documents rather than PDFs with added digital signatures, the files are unsearchable and much larger. I recently received a 50MB-sized stock purchase agreement. Not only did it take a while to download the file, but it took me twenty minutes to find the one term I wanted to review because I couldn’t use the search function. Efficient due diligence and closing processes make both entrepreneurs’ and investors’ lives much easier. You can read more about my closing process tips here.
- Failure to bcc investors: Some investors like to keep their cards close to their chest. Others have demanding day jobs and busy lives, and prefer to keep their contact information private. Most would prefer not to be on a 25-email chain with replies from other investors. Bcc’ing investors is just a courteous thing to do. This is especially important with investors who have not yet committed to invest.
- Blind introductions: This is my #1 personal pet peeve. Before assuming that an introduction to another entrepreneur, investor, or any other type of contact would be helpful to an investor, just send a quick note to ask whether the introduction would be useful. This is especially courteous to investors who receive dozens of meeting requests per day, but it is a sign of respect for anyone. I’ve also written about how to ask for an investor for an introduction previously.
- “That’s conservative.”: This doesn’t bother me much, but I’ve heard several other investors mention this one. When sharing financial projections with investors, entrepreneurs will sometimes say something like: “We estimate our sales to be $50 million in five years, and that’s conservative.” With the startup failure rate estimated at over 90%, the only way to conservatively project a startup’s financial future is to predict failure. I’d recommend simply presenting startup projections in the most simple and straightforward manner possible, and allowing investors to determine their own perception of risk.
No reasonable investor expects perfection, and I’ve personally invested in entrepreneurs who have made one or more of the mistakes on this list. Each of these mistakes is simply one data point to consider. I just hope this list will prevent some small things from making unnecessarily big impressions.
Author Elizabeth Kraus is the co-founder of MergeLane, an accelerator and fund for high-growth startups with at least one female in leadership. Kraus started her career as an intern for a fast growing startup and has been founding, consulting for and investing in startups ever since. She is an active angel investor, startup mentor and advisor, and has been very involved in the state and national effort to improve the entrepreneurial ecosystem and mobilize angel investors. Prior to founding MergeLane, Kraus founded and grew the Impact Angel Group to 50 active angel investors before negotiating a successful merger with Investors’ Circle, the largest and most active impact angel investing organization in the U.S.