Fundraising

What the greatest technology investors say about Fundraising

Brad Feld: 3 Types of Angel Investors

Brad Feld venture capitalist and Managing Director Foundry Group

“[] [entrepreneurs will] encounter three types of angel investors. The first type [] the potential [lead investor]” is decisive and “[] [will lead the round if interested or quickly decline]”.  This is optimal for entrepreneurs because “[entrepreneurs will know where they stand []”. 

“The second type [] (and they’re very common) is [] [a maybe]” who wants to stay informed without an early commitment.  Feld advises entrepreneurs to maintain contact with this type without wasting “[] time trying to convert maybes into lead investors.”

An angel may respond differently depending on the deal so one can’t stereotype.

“The third type [] [isn’t] really [an] angel” and is the most problematic because he’ll “[] cause [] distraction and delay.”

Entrepreneurs should expeditiously characterize each angel into 1 of these 3 types and focus on the first type to reach the first third of the financing.  “[] push aggressively toward the closing with the goal of moving the maybe [to yes or no].” 

If the financing’s first third is committed, the rest generally falls into place more promptly. “[] committed angels [call friends to complete a deal] and some [maybes may join in].  It doesn’t always work this way []” but getting the first third is promising.  Brad Feld, Focus on the First One-Third chapter, book Do More Faster by David Cohen & Brad Feld  copyrt 2011, pg 241-242