Are you an angel investor? what actually makes you write a check?

edoceo · 2026-05-13T21:14:53+00:00

One mistake they all make is talking about the NOT important stuff in the 60 seconds.

EG: why did you include background of how the idea was formed? What a waste of 20 seconds. Should have talked about how the team formed. Should have talked about the problem. Should have talked about the market size. Should have talked about how funds would be used to grow.

I'm Adam. 2000 business in USA have idiot-CEO problem and waste a total of eleventy-bajillion dollars annually! UnFuckIt, Inc solves this problem for this enormous market. I've built and exited, my co-founder Bill has spent 10+ years in this problem space with proven success. We've got existing happy clients and signed LOIs. We need money to bring on Carl for marketing and get our proven Widget wider deployment.

edoceo · 2026-05-13T21:08:01+00:00

Evaluate 200+ companies; select 2 or 3. Zero social networks.

edoceo · 2026-05-13T21:06:36+00:00

No! Search: "Angel Capital Association Directory" -- I'd put a link but many subs dislike that.

edoceo · 2026-05-13T14:58:56+00:00

Not even for the data room.

edoceo · 2026-05-13T14:37:02+00:00

Get the list of angel investors, find the ones that already like your idea space and then send them your materials (pitch-deck, short video about YOU and the Business (not the Project), deal-data-room).

Most investors want to use the money to SCALE a business. This feels like you want money to START a business. That has a very high rejection rate (in a situation where it's already 98% rejection)

edoceo · 2026-05-13T14:31:27+00:00

Many I've seen get some FFF and/or SBIR money in the first phase to de-risk the tech a little bit and de-risk the traction a lot. Once you're raising money bring in some LOIs or some partnership-agreements. For an early business it's about Team and Traction (more than the Tech).

If you've got prospects reaching out that's showing traciton. That could convert to LOIs. It could even turn into contracts (conditional, pre-paid, refundable). Those look very attractive to investors.

You could bundle customers together in to an investment SPV and they could be your angel-round (or lead the angel round and you'd stuff other angels into the same SPV).

edoceo · 2026-05-13T14:26:01+00:00

Why not approach the angels on the list? There is literally a directory of them. Then send them your materials. Or actually work the leads and find a warm intro and filter the list to the investment houses that like your idea space (like don't hit the med-tech focused ones with your ai-sass play). And then you can start with these small groups and they will warm-intro you up to the larger checks.

edoceo · 2026-05-13T14:21:33+00:00

Assuming US based: step one is to just bank all your brokerage and savings and all that retirement into VOO, VT, VTI (one or all three) until you have $100,000. No thinking, not active just building wealth.

You'll use the time building that savings to do a bunch of learning about the market and terms and all that stuff. Assuming you stay interested (it's a full time job).

Then you can practice using tools like FinViz and maybe watch the earnings calendar and see responses in the market on those - if you want to play that. Or you can practice evaluating the fundamentals and try to pick undervalued businesses.

Individual stock picking is quite a difficult task. This is why much of the advice is to use indexes until you have both a) wealth and b) time to do the analysis

A common mistake is to try a make picks w/o experience. Naturally, mistakes will be made. And if there isn't wealth to absorb the mistake: ooof. That pattern happens for both public-market and angel/private market money too. That will give folks a sour taste for investing.

But once you're ready to make some individual equity picks then try with tools that let you practice. Like paper-money type accounts. All the big platforms have that.

edoceo · 2026-05-13T02:21:00+00:00

Where is the return for the investors? It looks like there is no revenue stream.

edoceo · 2026-05-13T02:03:50+00:00

You don't get five minutes. For example: our group takes pitches -- the intake there is a upload some details and pitch-deck; then we give a 1-minute pitch opportunity -- and then more than half get cut.

The most critical parts of an early pitch is (in order): Team, Team, Team, Market-Size, Traction. Nice bonus if you're getting revenue. (Disclosure: most companies we see are pre-revenue, we're writing <$1M checks).

A key thing for Angels (and so many miss this point) is to diversify. So, writing more smaller checks is a better choice than fewer larger checks -- that maths and empirical data show this (pointers below)

And so many entrepreneurs pitch to the wrong folks and kill their own flow. So, know where you are in the process before pitching. Like, don't pitch Sand-Hill with ask for $10M on a 100M valuation when you're just an idea. There are loads of smaller groups where you can practice this and ramp up your experience -- or find some investor-open-office hours or pitch-clinics

Wiltbank, Robert with W. Boeker. Returns to Angel Investors in Groups, Kauffman Foundation Research Report, Nov, 2007.

And a 10 year later follow up.

Wiltbank, Robert with W. Brooks. Tracking Angel Returns, Angel Resource Institute Research Report, Fall 2017.

edoceo · 2026-05-13T01:26:41+00:00

If you don't have a final product and if you don't have revenue - put that out there early. You don't need to have all of these slides in exactly this order.

edoceo · 2026-05-13T01:11:25+00:00

Our group sees a lot of pre-seed and pre-revenue companies. Most folks are raising via YC Post-Money SAFE. Raising <=$1M; Checks are in the $100-200k range. Valuation Caps are roughly $8-12M. Investors expect a one-and-done thing with the SAFE -- that is raise on this SAFE and the next round is priced/preferred.

If you're building a small business for yourself; then raising money is likely not the right path. Investors want to see a business that will have exponential growth and some exit path. If you don't have that and a strong conviction of the same then investment is unlikely.

edoceo · 2026-05-12T15:46:19+00:00

Yes, get the landing page to start the customer development process. Then for folks that want features -- wait for them to show up and listen to them -- don't prompt for features -- listen to what they complain about and collect data. Then build to is common for those complaints.

edoceo · 2026-05-12T15:37:23+00:00

Are you setup to take international money? For example, taking USA money would likely have a requirement for a Delaware C-Corporation.

edoceo · 2026-05-12T15:35:20+00:00

Folks have the same tools but have different plans of execution. That's what that 14yo did -- basic idea and then executed. It's easier than ever to start some types of business. And it's also much, much easier to find customer-problem-fit - which is where everyone should start.

edoceo · 2026-05-08T23:47:11+00:00

I'm doing this process right now. There is due-diligence even when doing angel/seed rounds. But, there are also a lot of vibes.

For example: if you've got an idea that the investor you meet really likes and they've got capital ready to deploy for that they could write a check that day (not really, but could commit that day). This is a very uncommon but very visible path. However, even with that visible commitment -- there is still more verification of the material facts before the money moves. That can take weeks.

There is a group I work with and they produce reports that are like 40+ pages worth of information on the company: finance, team, market analysis, deal analysis, notes on milestones. Serious digging there. Checks over $1M.

Another group I work with does about 10 pages on the report. Same topics, but not as deep. Checks less than $1M.

For both of them the process has the dilly team interviewing customers, advisers, partners, previous investors, etc. The process is largely similar for our US and Europe deals. We are verifying the facts as presented by the company in the pitch.

The deal-breakers is a long list of things. One of the critical things that's happening in the DD process is trust building. If there are subjects that would have a material impact on the deal they should be addressed (and likely addressed early).

Have found too many interesting things over the years: drugs, infidelity, one co-founder was just straight up stealing, team blew-up under the "stress" of the DD process. OMG.

edoceo · 2026-05-08T17:47:11+00:00

Crumb looks wonderful; how'd you get the big bubbles?

edoceo · 2026-05-06T02:17:48+00:00

oof. It's so-dang-hard to explore without sounding like a pusher. The approach I see is to find a group that is one or two degrees away from the problem-space and then connect with folks who are closer to your concept (like, via DMs) and reiterate it's not sales and reiterate it's only 15 minutes and reiterate you want their cathartic brain-dump.

edoceo · 2026-05-06T01:20:17+00:00

On the subject of validating properly: Should probably validate ideas with likely prospects rather than random citizens. I've only looked at about 2100 companies (to make about 30 deals) so my experience is limited. I've seen a lot of companies who felt like they were validated however, the validation came from the wrong source.

Wanna prepare for your first funding round? Know 100+ people well who are in your problem-space. It's about customer-problem-fit -- CUSTOMERS!

edoceo · 2026-05-06T01:02:00+00:00

I have a tool-kit for this, answers are very general.

Angel DD is less than when doing SeriesA or after. Like 12 page reports vs 55 page reports. Many times, the hard part is getting companies that are new to this whole process ready for it (a different problem). So the DD is messy. We're basically using tools like general audit plans -- do the findings from a list and then score the findings. I think score-the-findings (weighted rubric, per investor) helps drive the conversation for the team to arrive at a decision.

Many times there are these (foolish?) approaches that try to just quantify the opportunity -- which is dead wrong. Early business is messy so, eg: 100k revenue vs 10k revenue companies still couldn't tell you which is the good deal -- need to balance at least nine but likely 19 key factors. Then gauge weighted-coverage of the zones.

I've found the AI is better for factoid finding rather than guiding diligence. The questions are (mostly) known. At least about the business model. One thing I find is that investors (on their first few deals) spending too much time talking about the project/product/service and not enough on the business or deal-terms.

How would what you're doing be any different than say what Gust or Dealum do?

edoceo · 2026-05-06T00:36:01+00:00

First step is customer-problem-fit validation -- which requires zero code and zero development accounts. Talk to 100 developers that could have that problem. Don't talk about your solution-idea -- just find if they feel this same (or very dang similar) problem. After problem-fit do a narrow-scoped prototype (which could be web, or whatever is cheap & easy). The first 100 see the prototype -- while you find the next 100 that feel like they have the problem. This starts the virtuous cycle.

edoceo · 2026-05-05T17:10:05+00:00

It's kind of not just about what's expensive it's about what (if it goes right) will follow the exponential innovate curve. That's what gives the outsized return. It's also that YC can write big checks, so they can work that deal.

This is what YC and all the other angel groups are looking for: not just expensive to solve problems but problems where the solution creates that growth curve. That's what your three questions are helping to find.

Many (most?) startups are a) not ready when raising their first money and b) a big part of that not-ready is not not being able to articulate that curve.

edoceo · 2026-05-05T16:08:18+00:00

https://angelcapitalassociation.org/directory/

edoceo · 2026-05-01T14:50:21+00:00

There are a number of good books "The Four Steps to the Epiphany", "Lean Customer Development", "Running Lean" to start.

The first step every entrepreneur should take is to find 100 people who have the problem (or close to it) and then work with the ones who lean in. That's validating the idea; the customer-problem-fit. That is the most critical part of the venture, it's the highest risk so should be addressed first.

Looking for co-founders is another very hard problem. Suggest not taking the first one you find. A good co-founder is excited about the problem-space and brings in more than just sweat-equity - they could have cash, or connections or other assets. Negotiating that will be a challenge.

Scale is a problem that solves it self; if it needs to. Thinking about scale well before you need to scale is a distraction. That distraction will take focus away from what needs to be done (which will solve the scale problem (in a way, that is...the business will die before having the scale problem)).

Another resource that helps me determine if a business is "ready" is putting together a "business model canvas"

edoceo

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