The Art of Raising Angel Funds on LinkedIn
I hear you, and I agree: the words “LinkedIn” and “startup” don’t go particularly well together. I don’t really like LinkedIn myself either… 99% of the messages I get there are — in a word — terrible:
Still, LinkedIn is the largest professional social media platform in the world, and I’ve yet to meet an angel or venture capital investor in Europe or the US that doesn’t have a profile there.
What’s more, I’ve heard of an increasing number of startups that managed to raise significant amounts of funding partially or entirely via LinkedIn and email, from Datanyze (€1.8m) to Goshido (€250k) and more.
Are LinkedIn plus cold emails the magic tool for early-stage funding? No. Do they always work? No. If you are a fundraising machine and your real life network is more than enough, drop it: warm introductions to investors are always better than cold outreach. If, however, you are not the best networker and think your venture deserves more attention than you normally get, why not give it a try? It’s one of those things with asymmetric risk / return: very limited downside (done well, it won’t take a huge amount of time and is very unlikely to hinder your reputation), huge upside (💸).
In my experience, the context where it makes most sense to use LinkedIn or cold emails for fundraising is when you are raising your first external funds, i.e. a seed / pre-seed round. This is the stage where you can find people willing to invest in you as a human being, not necessarily as a financial asset.
Here’s 7 things that led startups I worked with to successful LinkedIn rounds:
1. Tell a Story 👩🏼🎤
There are two main ways to attract angel investments on LinkedIn: hunting (blatantly reaching out to anyone relevant) or being hunted (attracting investors to reach out to you). Whichever you choose, don’t even bother trying if you don’t have a story to tell. Don’t be one of these people:
Write stories people can relate to, and do it in ways no one has seen before. Tailor your message to the person you are targeting, even if just to show that you’ve done your homework and know who they are. Make it clear you’re talking to THEM, not just to your screen.
To give you a few examples, Ilya from Datanyze emailed top managers of software companies asking them in a compelling way to test & review their product. He didn’t only get valuable tips, but also found the company’s future investors. As Ilya put it: “If you want advice, ask for money. If you want money, ask for advice”
Another example is Ger from Goshido, who sent 700 well-written notes to potential investors, offering 2% of his startup’s equity for €25k, and showing exciting calculations of what this 2% could be worth in a few years’ time. Even if less than 1 out of 3 responded, 10 commits were enough to secure the whole €250k deal.
Other companies we are working with are closing their first founding rounds without asking for anything directly. They picked one key area to focus their message around and tirelessly shared updates, focusing on the impact of their vision, until good quality investors reached out to them. Areas of focus can be execution (e.g. well-delivered and original product updates showing how quickly you are iterating), huge challenges (e.g. “big banks offer poor customer experience: we are building the new thing”) or a social vision (e.g. “our Pan-African solution will bring the continent together”)
Whatever your project, find your compelling story and tell it well.
2. Be crazy 🤡
When evaluating two messages / posts you are about to send, always go for the crazier, bolder option that shows off your personality. Here’s one of the most remarkable messages I’ve received back when I was working at The Family:
As over-the-top as it was, it got my attention in a second and made me curious to meet the founder who sent it. When sending a message, don’t be afraid of sounding different. As a matter of fact, that’s exactly how you want to sound: startup investors are looking for exceptional outliers. If you go cold, go bold.
3. Know who to target 👥
How do you find smart folks who will really invest in you, especially in a world with tons of scammers?
Do all angel investors on LinkedIn include that fact in their profile? Not necessarily! Use your head and be innovative as to who you approach. You have a cool advantage you may not know about: you are building a startup. While the word ‘startup founder’ a few decades ago may have been associated with madness, today telling your friends you just invested in young prodigies challenging the status quo is the new craze. Find people who want to be part of that!
You’ll naturally want to be backed by famous angel investors or top-tier founders known to be incredibly supportive backers. But they don’t necessarily need to be your first priority. Because you are using LinkedIn or cold emails to raise money, it probably means your venture is a non-consensus investment; it’s not one of those hyped deals every single person or fund wants to invest in. As famous angels get lots of consensus investments already, focus on the people who still have to build their brand and reputation as investors (just make sure they’re nice people who won’t interfere with the way you run your startup). Ask yourself “Who has €20k to invest in being cool and becoming a solid angel investor thanks to me?”
A place to start can be experienced founders at later stage companies (series C / D) or senior people at Consulting or Investment Banking firms (i.e. titles like Partner, Managing Director, Principal, Senior Consultant, etc. at firms like Goldman, Morgan Stanley, Lazard, McKinsey and so on). They may have a lot of money set aside to invest and little time to look for interesting ways to spend it. Making them feel like you are one of those ways could be a very easy way to raise!
Other folks you may want to approach are senior people (SVP / EVP / Executive Committee Members / CxO) at leading firms in the industry where your company operates (as long as they’re not competing with you). On top of having money set aside, these are likely to have a thorough understanding of your market and a strong network to push you up.
4. Don’t believe in shortcuts 🏋🏻
No one can raise your angel round on your behalf. Don’t believe in fundraisers, automated tools or other magical solutions: nobody can actually predict who will invest. This is because raising money from people you don’t know involves the creation of a special bond. Angel investments are about a person-to-person fit (or a person-to-project fit), not an investor-to-company fit. At this stage there are so few metrics to rely on that the only way an angel will invest is by believing in you as a human being.
5. Don’t waste time 🏃🏻
Raising money is extremely time-consuming, even when you already know lots of investors. This can only increase when you don’t know any. You’ll need to develop a real framework to not waste any time, so that you can focus on building your company without too many distractions. For example, you could:
- Be selective as to the type of people you engage in conversations. The more people are asking about profit & loss, revenue projections and downside risk clauses, the less you want them. The more they’re worried about a guarantee, or just generally seem like they might actually *need* that $15-20K, the less you want them. You should obviously respect everyone’s money and take it seriously, but you don’t want people who are afraid of losing it all. Again, you want people who have the guts to bet on your team & the market you are tackling.
- Do high resolution fundraising. When raising your first round, you don’t necessarily need to make it a fixed-size round and have all your investors lined up at the same time before closing (this can take lots of time and may create a deadlock). Introduced by Paul Graham, high resolution fundraising involves using convertible notes to give different prices to different investors, rewarding investors willing to move first with lower (effective) valuations (which they deserve because they’re taking more risk), and continuing to raise at higher valuations with slower investors.
6. Seek Porcini effects 🍄
Did I already mention I used to go mushroom picking in Austria as a kid? Finding my favourites, porcini, wasn’t easy, but if I walked up and down the woods for long enough to finally find one, I would then very likely find a bunch. The angel investor world is similar: If you find one angel investor, you’ve found a flock. Even if the investor you first target does not invest, they might put you in touch with someone in their circle who’s a better fit. Be very direct and honest in the way you ask good angels to provide you with intros to their deep-pocketed friends.
7. Keep it real ☕️
Only use LinkedIn-like tools as an initial launchpad. Once the tie with the investor is established, bring it to life via phone calls or coffee meetings; don’t expect someone to invest their money without putting in at least a call.
Inspired by this article by Andrey Gidaspov. Thank you for your help Kyle & balthazar
Want to dig deeper? Here’s some interesting articles to get valuable insights into…
- …the world (& thought process) of angel investors: Why I Stopped Angel Investing (And You Should Never Start) — Tucker Max
- …the type of folks you want to stay away from (or how your angels should behave): Dear First-time Angel Investor — Roy Bahat
- …how to think about your board if you want to add angel investors to it in the early days: Tiny startups need tiny boards — Fred Destin
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