They wanted $100,000, minimum. I politely bowed out. This is how startups sabotage their funding rounds.

How Investment Minimums Work Against You

Some startups insist on a minimum check size. This excludes helpful investors and makes it harder to close the round.

At $100,000, this startup was excluding most angels.

A typical angel check is around $25,000. Smaller checks are common as well. I write $5,000 checks direct on the cap table all the time.

I recently was in a deal with a very high profile, billionaire angel investor. Even that investor only put in $250,000!

That gives you an idea of how rare the big angel checks really are.

Small Investors Are the Key to Closing Your Round

With most angels excluded from the round, this founder wasn’t just losing out on one small angel check. He was losing crucial help to close his funding round.

Freshpaint, a YC startup that raised a seed round recently, is a great example.

The smallest check they took was $5,000. That small investor did more than any other person to help close their round.

The small fry made a series of introductions. This chain of intros led to $700,000 in investments!

How I Help Startups Raise Money

Okay, time for me to brag…

I can actually beat that $700,000 number. I introduced a founder to a VC fund that gave him an $800,000 term sheet.

This is the impact of meeting small investors and taking their money: you get access to their network. That network is crucial to closing your funding round.

Without those helpful angels, you’re stuck cold messaging VC funds.

Guess what? They get 1,000 of those messages a day. They probably won’t even read yours.

But What About My Cap Table?

I can imagine what you’re saying on the other side of this screen: but Francis, it’s bad to take small checks! What about my cap table?

The reality is, there are dozens of names on the typical startup’s cap table, even at Seed or Series A. If they’re helpful, one more won’t hurt you.

See if that small investor makes some useful introductions for you. If so, let him into the round.

And if you’re really worried about your cap table, you can pop up a Roll-Up Vehicle (RUV) for angels. This is a simple LLC that bundles all those angel checks into a single line on the cap table. You even get a free RUV if you use AngelList Stack, a cap table product.

Wrap-Up

Some founders have gotten into their heads that they should only take big checks. Nothing could be further from the truth.

Excluding the small checks cuts you off from helpful people. Those helpful little angels are the key to closing your funding round.

Meet with all sorts of investors, big and small. And if someone’s helpful, take their check, even if it’s tiny.

Pretty soon, you may find yourself raising millions.

More on tech:

Small Investors Lead to Big Investors

Three Free and Easy Ways to Meet Investors

Why It’s Easier to Raise $3 Million Than $300,000

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