Expectations of an Angel Raise - Pt. II - Time

When people started telling me that I should expect 6 – 9 months of dedicated effort in order to raise $750,000 from angel investors I reacted in a typical manner: “That must be an exaggeration or they must just be not as good as me. I’ll have this money raised in 60 days tops.” Now that I’ve gone through the process I am ready to be the “jerk” to tell you to prepare for a long and hard battle. That said, entrepreneurs are closing angel rounds every day and you can too. Use this article to set your expectations for the angel investor fund raising process and increase your chances of success.

The most costly part of raising start-up capital from angel investors is the time the CEO must spend on these efforts rather than growing the actual business. Preparing an investor presentation, executive summary, and full business plan may only take a week or so of dedicated time to complete. However, when you add time for incorporating critiques from your colleagues and peers it can easily take up to a good month to have your basic documents and investor pitch in a presentable state.

Before pitching to investors most start-up companies assemble an advisory board of three to five experts in various areas. You’ll need your pitch and executive summary to convince these advisors to join your team. While this step can be time consuming your advisors will help mold your pitch and executive summary into something you can be confidently proud of when you step into that room of investors. Depending on your network and situation assembling an advisory team could take one to four weeks.

The wise entrepreneur will first practice their pitch on everyone BUT a potential angel investor. By pitching to your attorney, at networking events, at pitch clinics, and to anyone in the start-up community you will get a chance improve your pitch before you get in front of someone who might actually write you a check. Plan for at least two weeks to pitch, listen, and iterate before you’re really prepared to impress angel investors.

The time you’ll spend pitching angel investors depends on the strength of your network and your ability to leverage resources such as angel groups, investment forums, and online angel investor networks. Most angel rounds range in size from $250,000 to $750,000 and most angel investors commit $10,000 to $50,000 at a time. That translates to quite a few sales to close. The process of pitching investors is like any other outgoing sales game: you have to keep filling your investor pipeline. In your personal network you may be able to schedule meetings only a week in advance. However, the independently wealthy guy you met at that networking event may not be able to get you on his calendar for 30 days. Angel groups only meet once per month and investment forums are once per year. You have to make sure to begin the submission process in advance so you can present at as many angel groups or investment forums as you can as fast as you can. Even experienced entrepreneurs with a killer management team, lots of traction, and a hot idea can spend three to six months pitching their start-up opportunity at various venues, competitions, coffee shops, and events. It becomes a numbers game due to the fact that angel investors often stick to opportunities that they are personally interested in.

Before an interested angel investor writes a check he will want to do some fact checking and other analysis on your business plan. Depending on how organized your plan is and the ambition of the angel investor this process can take an average of one to four weeks. Some angel groups, such as Keiretsu, will expedite this process by collectively moderating the due diligence for all interested angel investors at the same time.

Once due diligence has been completed there is often still a frustrating delay in receiving the check. It takes time for angel investors to move money around, get authorization from their attorney, sign your legal documents, and put them in the mail. In most cases this final stage should only take 30 days, but there are many cases where it has taken as long as 90 days.

Obtaining angel investors start-up capital is a long challenging ride, but having the proper funding to launch your business may be worth the effort. The key is to prepare with the proper expectations so your fundraising campaign and day to day business can both be successful.