Yesterday, I had a great conversation with a founder kicking off his Series A. He had an awesome product with serious traction — but one thing was missing.
He had no idea how to price the round!
Who could blame him? Though this founder had raised money numerous times in the past, he hadn’t come to market in a couple of years.
And what a couple of years it’s been!
I explained that with his nearly two million in revenue, he’d probably be looking at a pre-money valuation of around $20-25 million. In 2021, he might’ve commanded 5 or 10 times that.
Start with Angels
Although he faces a tough market, this founder’s approach is brilliant. Chatting with angels is a great way to start your fundraise.
Founders only come to market every year or two.
But we’re here all the time! We see actual deals get done and the prices at which they happen.
How to Get a Meeting
To get in front of us, show us what you have to offer. This is a good cold message:
“Hi Francis,
I’m the founder of Uber, a marketplace for black car rides. We have $20,000 a month in revenue, growing 20% MoM.
We will dominate the $76 billion taxi market. Our rides are cheaper, easier, and more comfortable.
I’m kicking off our seed round raise. Got 15 minutes?”
I’d respond to that.
But if you just connect to random angels on LinkedIn with no clear reason, don’t expect a response.
And if you’ve already got angels on your cap table, you’re really in luck! Booking a chat with them should be easy — it’s in their interest to help you!
Ask for Brutal Criticism
Angels can also give you feedback on your pitch in a low-stakes setting. No angel, whether they invest $1k or $100k, will make or break your company financially.
Where would you rather work out the kinks — in a pitch where $50,000 is on the line, or when $50 million is?
Whether you get a check or not, ask the investor for his most unfiltered feedback. You might hear something like this:
“It’s a cool concept, but black cars are a tiny market. This isn’t venture backable. No one’s going to invest in this.”
That stings. But take that feedback and act on it.
Do a better job of explaining how black cars can compete with taxis and how the taxi market is massive. Paint a vivid picture of a future multibillion dollar company.
Moving Up the Foodchain
Once you’ve perfected your spiel with angels, move on to VC’s. Start with mid-tier funds, then the top tier ones.
By the time you meet Sequoia, you’ll have made your pitch as compelling as possible. And you’ll have spoken to so many investors, you might even have competing term sheets!
Wrap-Up
Angels give you valuable market color and feedback in a low stakes setting.
And we like helping founders! It’s what gives us meaning in our work.
Take advantage! With the right advice, you just might raise like it’s 2021.
Do you talk to angels? Why or why not?
Leave a comment and let us know!
If you enjoyed this post, subscribe for more like this!
More on tech:
Why I’ve Never Invested in Crypto
How VC’s Could Have Avoided FTX
The Trick I Stole from Benchmark
Save Money on Stuff I Use:
This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.
More on Fundrise in this post.
If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!
I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!
I wrote a detailed review of Misfits here.
Use this link to sign up and you’ll save $15 on your first order.
Tremendous 
Leave a comment