AngelList is a platform that connects entrepreneurs to angel investors to raise seed stage capital.
Out of the $1.5 million dollars in angel funding we've raised for Socialize, over $1 million came from introductions made on AngelList. We were very early AngelList users under our AppMakr brand, with Brendan Baker doing a detailed analysis of our use of AngelList in his Anatomy of a Seed project. I also wrote a lengthy manifesto about our fundraising experience, and when AngelList was very new I interviewed Naval Ravikant, one of the AngelList founders.
Recently, using AngelList has changed the way I've been fundraising. Where traditionally, I've had to dedicate a block of time to fundraise full time, I can now fundraise passively, meaning just by focusing on having an optimized AngelList presence and a few specific techniques, I don't have to spend blocks of my time finding high quality angels. That is a game changer for us -- fundraising is an incredibly distracting process, and it's especially hard to innovate and iterate on your startup when you're distracted by bolstering the company's bank account. Being able to have angels come to me has given me a freedom as an entrepreneur that's just fantastic.
As I was talking to my friend Ben Young, CEO of Nexercise, about this sea-change in fundraising, I offered to critique his AngelList page to help him optimize it for this type of inbound passive investment.
You can find the Nexercise AngelList profile here, and compare it to my Socialize AngelList profile here. While I don't have any official data or insight into what makes an AngelList profile great, Socialize does have 533 followers and a reach of 1,396 with which to message investors, and I have over 1,000 followers on my personal profile. However, if you have differing views or other tips, I'd love to hear about them in the comments section. I definitely haven't figured it all out yet, and AngelList changes daily.
First, some background on AngelList:
If you're an entrepreneur and you haven't yet made a profile on AngelList, you need to do that right away. AngelList is, incredibly, a free service. It's one of the most valuable tools I have as an entrepreneur, and it's 100% free. There are lots of other angel groups out there that charge a fee for the privilege of pitching to them. Steer clear of those -- despite a similar sounding name, AngelList is not anything like that. Think of AngelList more as a Facebook type of social platform that's dedicated to connecting entrepreneurs to investors. Oh, and did I say it's 100% free?
The Basics: The basics in AngelList are pretty straight forward. Fill your personal and company profiles out, and keep them updated on a regular basis. You can get all this done in the span of an hour or two.
But AngelList really starts to shine once you get its "Social Proof" engine cranking. The thing to know about this engine is that AngelList isn't a magic bullet. It won't make your startup hot if it's not. But what it will do is give you what I call "force multiplication." If you can manage to convince some great advisors or angel investors to believe in you, having them reflected in your AngelList profile will pay great dividends. It all comes back to social proof -- get people to believe in you, and have that reflected in AngelList, which will in turn get more people interested.
If you don't currently have strong social proof for your startup, then just start by making an AngelList profile and work on getting an advisor who's well known in your field to believe in you and your startup, and be willing to be publicly listed as an advisor on your AngelList profile. You can start with just one. If you can't get one well known and well respected subject matter expert to believe in your startup, then you have to really focus on iterating on your startup concept until you can get someone excited about it who can in turn get others excited through a platform like AngelList.
AngelList Pro Tips:
Once you've gotten the basics covered, you'll be ready to really use AngelList as an engine to drive investor interest. I have three main pro-tips for you.
The first one is to message everyone who 'follows' either your personal profile or your company's profile. At left is the message I send out to everyone who follows me.
Keep your expectations low -- AngelList is on a 'follow' kick right now, encouraging people to follow each other to build out its network, so you'll get lots of followers who don't really have a deep interest in what you're up to. However, if you message all of them, you can expect a 10% to 30% response rate. I've found that those who do respond turn into great conversations, regardless of whether they're investors or not.
The second tip is to leverage your follower & investor network to announce company news and funding announcements. AngelList lets you "Message Investors" which is broken into two buckets: Your direct investor-followers, and investors who follow your investors. You can see what that looksl like in the image at right.
You have to be more judicious with this list, as it requires your investors to "forward" your message to their followers. Sending a company update out monthly is a good schedule. Also, when you open up an angel round, or you get a new investor in a current round, you should also announce that news to this list.
My last pro tip also centers around messaging: You can send public updates out in the "comments" section. I also post a company update monthly here (caution: this update is public by default, so don't reveal anything you want to keep private).
You can also encourage others to post comments about your startup in this section. It's a great way to jump-start some social proof for your profile page -- whenever you talk to someone who likes what you're doing, send them a follow-up email asking them to make a comment on your profile page.
Here's a little mini trick for this comments section: Due to federal regulations, any fundraising information has to be limited to accredited investors. You can put fundraising information in this comment area, and AngelList will automatically convert the comment from 'public' to 'investors only.' It's a bit nerve-racking to do this, though, because your comment starts out as being public before AngelList runs it through a filter to make them investor-only.
Do you have any other pro tips? If so, please share them in the comments below; I'd love to hear them.
Here are my comments about Nexercise's profile in three screenshots (click to enlarge each), with my commentary interspersed in between the images:
In the image above, I mention that Nexercise may want to optimize its tags. Here's what I mean by that: A startup is limited to four tags (called "markets"), and they're a great way to get exposure for your startup. Therefore, you want to choose tags which have as many followers as possible, and as few startups as possible. I would recommend that Nexercise switch out one of its two similar tags ('fitness' and 'health & wellness') and instead use a tag like 'Gamification,' which has 12,333 followers but only 89 startups. Nexercise's current 'Fitness' tag, in contrast, only has 3,404 followers and 184 startups, and 'Health & Wellness' has 2,214 followers and 577 startups. So by switching at least one of those tags out with the Gamification tag, Nexercise should be able to get more exposure.
In the images above and below, I call out some of the great things Nexercise has done in their profile, as well as some areas for improvement.
This is great. There is nothing I disagree with here. A few thoughts:
- Don't worry too much about how many startups/followers are in your markets -- go for something accurate
- We still look at every startup so we can find the ones that have great product/traction/team but no social proof. Then we distribute those gems to investors.
- I think the Nexercise high-concept pitch is good. I don't think that's the place to talk about traction or market size. It is a short product description. Although there are some nice counter-examples http://angel.co/9gag
- I agree on starting your profile early and keeping it updated. Just turn off fundraising if you're not fundraising. Lots of companies use AngelList just for recruiting http://angel.co/talent
Amazing insight yet again. I hope those that read this realize how hard it is to put this together and how it can drastically change one's business.
Thanks for sharing.
Awesome article. I referenced it as one of the best in a post about trending on AngelList: http://blog.justinthiele.com/trending-on-angellist-tactics-results
@sardire duly noted -- you're right, it's not *completely* passive. I still actively follow up on interest. The passiveness comes from not doing outbound prospecting anymore.
it was because of the comma at the end of the URL string. Here it is again sans comma: http://go.danielodio.com/powerpinch
@jlearmonth, glad you're getting something out of it!
Yeah actually re: How I made the video at http://go.GetSocialize.com/key-benefits -- it's something I hacked together that I call "PowerPinch". Check it out at http://go.DanielOdio.com/PowerPinch, and enjoy!
Daniel -- great post. Very helpful for guys like me that are in the process of pimping out our AL profiles!
Naturally after reading this post, I went and checked out your AL profile for Socialize. What program did you use to create the presentation in the Vimeo overview? I thought it was a very effective way to tell the story, so was hoping to perhaps emulate that approach :). Is it a Prezi?
Nivi thanks for the awesome comments; appreciated. What are the criteria you use to find the "hidden gem" startups?
Wilson, it's very true that once you talk to an investor, a lot has to happen for him/her to be willing to give you another look.
Having said that, I hate waiting for triggers. (In fact, here's a blog I wrote about that topic: http://go.drod.io/GTv3UY). I'm always inclined to get a project started and take small iterative steps towards its completion vs. waiting.
I'd encourage you to make a profile and start filling it out. If you're doing something impressive, it'll catch people's attention. If you're not (yet), it won't, and you'll have to iterate on it for a while to get it to a place where people take notice.
Either way, you're better off getting to know the in's & out's of AngelList by getting started. It's too valuable a resource to put off.
@DanOdio - I've been under the impression that you shouldn't create a profile on AngelList until you have something significant because the first impression is so valuable and companies usually don't get second looks.
Do you think it is better to get a basic profile out and update it and investors will be willing watch the trends grow over time without dismissing it? Or is it still best to try to make that big one time splash?
In 2010 I started writing a series of blogs titled "Fundraising Cribsheet" describing our experience raising a $1MM round for AppMakr.com.
My goal has been to allow other entrepreneurs to raise money more efficiently than the 14 weeks it took us. Brendan Baker, an MBA student at Oxford University, has added a deep layer of analysis to this experience by doing his thesis on our fundraising experience. Brendan's initial work is outlined in this blog post, with much more analysis here.
Here is my guide to this manifesto on fundraising, so you can consume the information in the chunks most relevant to you:
In 2010 I started writing a series of blogs titled "Fundraising Cribsheet" describing our experience raising a $1MM round for AppMakr.com. My goal has been to allow other entrepreneurs to raise money more efficiently than the 14 weeks it took us. Brendan Baker, an MBA student at Oxford University, has added a deep layer of analysis to this experience by doing his thesis on our fundraising experience. Brendan's initial work is outlined in this blog post, with much more analysis here. Here is my guide to this manifesto on fundraising, so you can consume the information in the chunks most relevant to you: Daniel's "Rule Of 10" Angel Intros + $1MM Raise Infographic with Brendan Baker. Cliff Notes on Raising Your First $1 Million Through AngelList' Keynote + Panel Interview with Naval Ravikant, co-founder of AngelList, an angel fundraising vehicle I highly recommend Interview with George Zachary, a partner at Charles River Ventures, on how to approach and pitch Venture Capitalists Interview with Stephen DeBerry, a partner at Kapor Capital, on recommended deal structures and more Interview with Shai Goldman, a director at Silicon Valley Bank A panel hosted by Shai discussing the differences in raising angel vs. Series A funding A blog showing visually how 8.47% of the potential investors I spoke to ended up funding us How to 'Hack Your Funding' by Naval Ravikant of AngelList Other good resources include: VC Panel at the Digital Media Conference Fundraising Panel at TechCocktail's Startup Mixology Event Don Rainey talks about investing in LivingSocial
Patri Friedman left this very smart comment on the convincing arguments post -
I’m pretty skeptical of whether researching investments is a good idea for non-professionals. Financial speculation is fun, but you are competing against specialists who have spent their whole lives studying the subject, have teams of researchers, and are betting so much that they can afford to buy the best computers, data, etc. I think almost everyone should just buy the Vanguard Target Retirement 20X0 fund.
The exception is if you’re in the startup world & you know people who you trust & respect who are doing startups, angel investing in them w/ 10%-20% of your income makes sense to me. At worst you’ll lose a little money & learn a lot about who to trust & how startups work. Another is if you know a city/region/country very well and want to own property there – ownership has advantages (ie we have done extensive customization of our cohousing community here in Mountain View) and since it’s such a big asset it’s definitely worth researching.
This is a great point.
I've been studying a lot of finance lately. One that I've really enjoyed is "The Intelligent Investor" by Ben Graham.