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How to close an angel round
       Venture Hacks
Outline: How to close an angel round

 1. You can close an angel round with 'mass
     syndication'
 2. Mass syndication
 3. Start with terms and valuation below market
 4. What you want in your term sheet
 5. What you don't want in your term sheet
 6. Should you have a board seat for seed
     investors?
 7. This isn't comprehensive term sheet advice
 8. Memorize the term sheet before your first
     meeting
 9. How do you set your valuation? Price it to
     move
 10. How do you bring up the terms in a meeting?
Outline: How to close an angel round

 11. Describe how the terms are investor-friendly
 12. A preferred round is a good way to set up
     good initial terms
 13. Does a small seed round need protective
     provisions? Pros and cons.
 14. Get feedback on the terms in the first
     meeting
 15. Drop names to build social proof.
 16. Social proof works differently in a Series A
     round with VCs
 17. See if the "interest" includes a dollar
     amount, intros, and name-dropping (a.k.a.
     soft circled)
 18. When do you need a lead?
 19. Approach the financing as if you won’t find a
     lead
Outline: How to close an angel round

 20.   What's a lead investor?
 21.   If they say "find a lead," ask why
 22.   How to create a deadline
 23.   Raise the money when you don't need it
 24.   Send two emails to the angels
 25.   Do a rolling close: the cash comes in just-
       in-time
 26.   Mass syndication can fail if a very high
       social proof investor drops out
 27.   Use AngelList and StartupList to get intros
       to angels
 28.   Read the free chapter from Pitching Hacks for
       tactical advice on getting intros
 29.   What do angels look for?
 30.   Advisors are good for getting your foot in
       the door, not in a pitch
Outline: How to close an angel round

 31. Get advisors by going to events or talking to
     entrepreneurs
 32. Before you raise a seed round, you need a
     product in the marketplace
 33. Use customer development and lean startup
     techniques to get to market with less
 34. If you need money to get something in the
     marketplace, pitch idea investors
 35. Pitch incubators or do your startup on the side
 36. What are the different types of seed stage
     investors?
 37. If you're talking to a VC, make sure they
     really do seed stage rounds
 38. Potential concerns with pitching multi-stage
     and seed-stage firms
 39. Get intros to seed investors with AngelList/
     StartupList
You can close an angel round
   with 'mass syndication'
1. Drop names
2. No lead
3. Write a term sheet
Start with terms and
valuation below market
What you want in your term sheet:
  1. Price
  2. Liquidation preference
  3. Company controls conversion if you're
  raising debt
  4. Majority of investors can approve
  amendment
What you don’t want in
        your term sheet:

1.   No minimum raise
2.   Probably no board seat
3.   Vesting is a pre-nup
4.   But have an option pool
Should you have a board seat for
        seed investors?
This isn't comprehensive term
        sheet advice
Memorize the term sheet before
      your first meeting
How do you set your valuation?
           Price it to move.

venturehacks.com/articles/seed-valuation
How do you bring up the
  terms in a meeting?
Describe how the terms
are investor-friendly
A preferred round is a good way
  to set up good initial terms
Does a small seed round need
   protective provisions?
       Pros and cons.
Get feedback on the terms
   in the first meeting
Drop names to build social proof.
First, "interested" isn't "committed".
     Second, use these guidelines:

   1. Money in bank? Drop the name.
   2. Negotiating term sheet? Drop the name.
   3. In the first meeting, ask them if you
   can drop their name as "interested."
Social proof works differently in
    a Series A round with VC’s
See if the "interest" includes a
    dollar amount, intros, and
name-dropping (a.k.a. soft circled)
When do you need a lead?
1.   Angel doesn’t know you
2.   Angel doesn’t like terms
3.   Diligence required
4.   Raising closer to $1M
Approach the financing as if you
        won't find a lead
What's a lead investor?
1. Wants half the round or more
2. Will help you find other investors
3. Can decide without social proof

venturehacks.com/articles/lead
If they say "find a lead,"
         ask why
How to create a deadline
1. Need to make a payment
(not a great approach)
2. Artificial deadline with terms that are
only good for now
3. Holidays
4. Traveling
5. Oversubscription (the best)
Raise the money when
 you don't need it
Send two emails to the angels...
First email:
1. Term sheet
(outline terms in the email body too)
2. List of investors
3. Deadline
4. Feedback
Second email:
1. Final term sheet with feedback
incorporated
2. Final list of investors
3. Closing docs and wire instructions
Do a rolling close: the cash
    comes in just-in-time
Mass syndication can fail if a very
high social proof investor drops out
Use AngelList and StartupList to
      get intros to angels
     venturehacks.com/angellist
    venturehacks.com/startuplist
What do angels look for?
1.   Traction
2.   Bios
3.   Social Proof
4.   Demo
Advisors are good for getting your
 foot in the door, not in a pitch
Get advisors by going to events
  or talking to entrepreneurs
      thestartupdigest.com
Before you raise a seed round, you
 need a product in the marketplace
Use customer development and lean startup
  techniques to get to market with less

             steveblank.com
        startuplessonslearned.com
Pitching Hacks... Free chapter: tactical
    advice on getting investor intros

        venturehacks.com/pitching
If you need money to get something in
the marketplace, pitch idea investors:
     1. Friends and family
     2. People who know you really well
     3. People who have the same vision you do
Pitch incubators or do your
       startup on the side
venturehacks.com/articles/half-assed
What are the different types of
     seed stage investors?
 1. Individual angels investing their own money
 2. Seed stage funds with LPs
 (may look like a person or a fund)
 3. VCs who also do seed rounds
 (seed program or not)
If you're talking to a VC, make sure
  they really do seed stage rounds
Potential concerns with pitching
multi-stage and seed-stage firms
 1. VC diligence process
 2. VC governance: board control, board meetings,
 financial focus
 3. Negative signaling value in the next round
 4. Investor owning too little
 5. Leaving room for angels
Get intros to seed investors with:
           AngelList
    venturehacks.com/angellist
          StartupList
   venturehacks.com/startuplist
✌
Get more startup advice
     Venture Hacks
    venturehacks.com
     @venturehacks

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How to close an angel round

  • 1. ✌ How to close an angel round Venture Hacks
  • 2. Outline: How to close an angel round 1. You can close an angel round with 'mass syndication' 2. Mass syndication 3. Start with terms and valuation below market 4. What you want in your term sheet 5. What you don't want in your term sheet 6. Should you have a board seat for seed investors? 7. This isn't comprehensive term sheet advice 8. Memorize the term sheet before your first meeting 9. How do you set your valuation? Price it to move 10. How do you bring up the terms in a meeting?
  • 3. Outline: How to close an angel round 11. Describe how the terms are investor-friendly 12. A preferred round is a good way to set up good initial terms 13. Does a small seed round need protective provisions? Pros and cons. 14. Get feedback on the terms in the first meeting 15. Drop names to build social proof. 16. Social proof works differently in a Series A round with VCs 17. See if the "interest" includes a dollar amount, intros, and name-dropping (a.k.a. soft circled) 18. When do you need a lead? 19. Approach the financing as if you won’t find a lead
  • 4. Outline: How to close an angel round 20. What's a lead investor? 21. If they say "find a lead," ask why 22. How to create a deadline 23. Raise the money when you don't need it 24. Send two emails to the angels 25. Do a rolling close: the cash comes in just- in-time 26. Mass syndication can fail if a very high social proof investor drops out 27. Use AngelList and StartupList to get intros to angels 28. Read the free chapter from Pitching Hacks for tactical advice on getting intros 29. What do angels look for? 30. Advisors are good for getting your foot in the door, not in a pitch
  • 5. Outline: How to close an angel round 31. Get advisors by going to events or talking to entrepreneurs 32. Before you raise a seed round, you need a product in the marketplace 33. Use customer development and lean startup techniques to get to market with less 34. If you need money to get something in the marketplace, pitch idea investors 35. Pitch incubators or do your startup on the side 36. What are the different types of seed stage investors? 37. If you're talking to a VC, make sure they really do seed stage rounds 38. Potential concerns with pitching multi-stage and seed-stage firms 39. Get intros to seed investors with AngelList/ StartupList
  • 6. You can close an angel round with 'mass syndication' 1. Drop names 2. No lead 3. Write a term sheet
  • 7. Start with terms and valuation below market
  • 8. What you want in your term sheet: 1. Price 2. Liquidation preference 3. Company controls conversion if you're raising debt 4. Majority of investors can approve amendment
  • 9. What you don’t want in your term sheet: 1. No minimum raise 2. Probably no board seat 3. Vesting is a pre-nup 4. But have an option pool
  • 10. Should you have a board seat for seed investors?
  • 11. This isn't comprehensive term sheet advice
  • 12. Memorize the term sheet before your first meeting
  • 13. How do you set your valuation? Price it to move. venturehacks.com/articles/seed-valuation
  • 14. How do you bring up the terms in a meeting?
  • 15. Describe how the terms are investor-friendly
  • 16. A preferred round is a good way to set up good initial terms
  • 17. Does a small seed round need protective provisions? Pros and cons.
  • 18. Get feedback on the terms in the first meeting
  • 19. Drop names to build social proof. First, "interested" isn't "committed". Second, use these guidelines: 1. Money in bank? Drop the name. 2. Negotiating term sheet? Drop the name. 3. In the first meeting, ask them if you can drop their name as "interested."
  • 20. Social proof works differently in a Series A round with VC’s
  • 21. See if the "interest" includes a dollar amount, intros, and name-dropping (a.k.a. soft circled)
  • 22. When do you need a lead? 1. Angel doesn’t know you 2. Angel doesn’t like terms 3. Diligence required 4. Raising closer to $1M
  • 23. Approach the financing as if you won't find a lead
  • 24. What's a lead investor? 1. Wants half the round or more 2. Will help you find other investors 3. Can decide without social proof venturehacks.com/articles/lead
  • 25. If they say "find a lead," ask why
  • 26. How to create a deadline 1. Need to make a payment (not a great approach) 2. Artificial deadline with terms that are only good for now 3. Holidays 4. Traveling 5. Oversubscription (the best)
  • 27. Raise the money when you don't need it
  • 28. Send two emails to the angels...
  • 29. First email: 1. Term sheet (outline terms in the email body too) 2. List of investors 3. Deadline 4. Feedback
  • 30. Second email: 1. Final term sheet with feedback incorporated 2. Final list of investors 3. Closing docs and wire instructions
  • 31. Do a rolling close: the cash comes in just-in-time
  • 32. Mass syndication can fail if a very high social proof investor drops out
  • 33. Use AngelList and StartupList to get intros to angels venturehacks.com/angellist venturehacks.com/startuplist
  • 34. What do angels look for? 1. Traction 2. Bios 3. Social Proof 4. Demo
  • 35. Advisors are good for getting your foot in the door, not in a pitch
  • 36. Get advisors by going to events or talking to entrepreneurs thestartupdigest.com
  • 37. Before you raise a seed round, you need a product in the marketplace
  • 38. Use customer development and lean startup techniques to get to market with less steveblank.com startuplessonslearned.com
  • 39. Pitching Hacks... Free chapter: tactical advice on getting investor intros venturehacks.com/pitching
  • 40. If you need money to get something in the marketplace, pitch idea investors: 1. Friends and family 2. People who know you really well 3. People who have the same vision you do
  • 41. Pitch incubators or do your startup on the side venturehacks.com/articles/half-assed
  • 42. What are the different types of seed stage investors? 1. Individual angels investing their own money 2. Seed stage funds with LPs (may look like a person or a fund) 3. VCs who also do seed rounds (seed program or not)
  • 43. If you're talking to a VC, make sure they really do seed stage rounds
  • 44. Potential concerns with pitching multi-stage and seed-stage firms 1. VC diligence process 2. VC governance: board control, board meetings, financial focus 3. Negative signaling value in the next round 4. Investor owning too little 5. Leaving room for angels
  • 45. Get intros to seed investors with: AngelList venturehacks.com/angellist StartupList venturehacks.com/startuplist
  • 46. ✌ Get more startup advice Venture Hacks venturehacks.com @venturehacks