Use Angels for the Initial Fundraise

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In the earliest stages of the fundraise, angels are often a better fit than venture capitalists.

VCs come into the round when there’s strong traction and the business is well-formed.

Angels are go-to-market investors and like to come in early when the valuations are relatively low.

The terms sheet is typically a convertible note or SAFE note, where the valuation is not set.

Most angel investors are follow-on investors and are not going to take the time to set the terms and valuation of the deal.

They just want to be in the deal and will write a $25K or $50K check to do so.

They’ll let a lead investor set the valuation in a later round.

In the early stages, it can be hard to set the valuation since there are still many unknowns.

Valuation is more easily set when the revenue traction is clearly defined.

Start your fundraisers with family and friends.

As you draw the circle wider, go to angel investors.

Bring a solid growth story with some revenue.

Revenue demonstrates product and market validation.

The product works, and people will pay for it.

Delay pursuing VCs till there is more traction.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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