Wednesday, December 10, 2008

How to pitch angels?

While there is plenty of literature (including my buddies' blog Startable), how to pitch angel investor still remains as a mystery to many entrepreneurs seeking..... "angel round".

When an entrepreneur goes to conference and unknowingly runs into an angel investor (because angels don't really have a name badge), the conversation would go like this.

E: Entrepreneur
A: Angel

E: Hello.
A: Hello. What do you do?
E: Well, I'm working on a neat concept in the online video space to help companies monetize on contents.
A: That's a hard problem to solve. How do you do that?
E: Well, my partners and I developed this software to (blah blah)
A: Wow, that's amazing. By the way, I gotta meet someone in 2 minutes, but if we can meet some other time to discuss more in detail, here's my card. Call me.
E: Sure.

This is overly exaggerated conversation. I would assume that the next meeting will be about how the technology works, how many customers they have, etc.... but not much about team building, business model, exit strategy, capital plan, etc.

Why am I saying this? Pitching an angel is just that different. It's the art of pitching an idea vs. pitching a company. Enlighten with how brilliant and innovative the idea while knowing all the VC diligence stuff in back of your mind. The idea behind a small team of founders is what angels really want to understand and possibly add value by bringing some advice. An ideal angel investing should be like paying an expensive ticket to take a close look at the company and potentially work with the founders to materialize the company's mission. If entreprenerus follow the strategy of pitching a company.... say, "I have a company disrupting music industry, and our target market size is $500M, and we hope to dominate the market and return 5x of your investment in 5 years." Sounds like an attractive opportunity, but overly capitalistic and unrealistic.

Keep in mind that all that business stuff is required at some point, and all entrepreneurs should be able to talk about it later... just not at the angel investing phase.
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