Finding Angel Investors is All About Social Media Now – What BS!

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Alright, I don’t rant often, in fact, I don’t rant period – its not my thing…

…and you can probably hear the ‘but’ about to arrive right?

So what’s got me hot under the collar?

The latest string of articles pounding the drum for Social Media and Social Networking – suggesting this phenomenon is the new secret sauce to raising angel investor funds. What utter and absolute BS!

Look – I love social marketing, its been a key way I’ve been able to get out and meet some really cool folks…but to try to say that social networking is the new panacea for entrepreneurs looking for startup capital is, well, its just pure crap! And more than that, it could be harmful if new entrepreneurs actually believe and act on it and think its the way to expedite funding their new businesses.

Why?

Because, and this is another reason why I’m getting a little frustrated, there is not ONE kind of angel investor and therefore there is not ONE general method for engaging and establishing a relationship with them if they don’t already pop over for Sunday lunch or for a bottle of Cabernet.

Just because we label them ‘Angel investor’ doesn’t mean they are all the same or are one type.

Their PRIME motivations differ just like any of us.

Now are there key considerations or ‘must haves’ when engaging with angels? Sure.

Does it need to be via twitter? Of course not.

Now this is where the social networking junkies will get all bent out of shape and claim that social networking is a more efficient way to network and connect with angels.

Again – underscoring my point – there are different kinds of angels (See a theme here?)

In my opinion – the angel investor community is going through an evolution – let me explain that…

Once upon a time angel investors were predominantly mature business people and the wealthy.

Angel investors are still mature business people and the wealthy but we’re seeing new-rich twenty and thirty somethings who have exited one software, internet or other meteoric rising company recently having being acquired by Google, Facebook et al – and when asked what they want to do now, being an ‘angel’ seems kinda cool as they watch Chris Dixon and others gaining cult followings. Sounds good at cocktail parties right and doesn’t require being in the same place every day.

Let’s all become angels – where can I get some new business cards made? Anyone?

What does this influx of new blood mean?

It means angel investing is getting shaken up.

It means that angels, what they want from investments, how they make decisions, and what startups can expect from angels is changing. Big time!

We’re seeing a new breed of super angel, and angel networks – both formal and informal.

But, and this is why I’m not climbing on the “Oh, isn’t Social Networking great for finding Angels” – is because I think, despite all the tectonic shifts occurring in angel investing, there are some threads which continue.

The best way to connect with an angel investor is to be referred by a trusted advisor, friend or contact. And having your investment begging tweet forwarded by one of your 5055 followers to an angel investor that is connected digitally just doesn’t cut it as a ‘trusted advisor or friend’. Sorry!

Another factor to consider is that angels want to ‘get it’ when they look at your business model. So, getting your concept out to everyone on the planet is just inefficient.

Angels will often invest in spaces /industries where they have experience or a strong interest – if you are looking for an angel remember this next point. Every hour you spend talking to investors is an hour taken away from your customers. And one could argue is therefore not where you should be spending 80% of your time and if you are not laser focused on what kind of angel you need, want and is most likely to say ‘yes’ then you are wasting precious time.  Yes angels are smart people (often but lets not forget that having cash does nothing to increase your IQ whatever an angel may tell themselves when they look in the mirror in the morning) but you should try to get the investment process resolved efficiently so you can focus on…your business (remember that?)

Finding the perfect angel is not a throw it at the wall and see what sticks process.

So – love twitter but:

1)  Understanding your angel needs beyond the cash (What I call your “Angel DNA Match”)

2) Finding the people who will refer you to the right angels (People respected and with some gravitas is always good)

3) Making sure you have the key proof points stacked right (Ask me if you want more info on this concept)

4) Being ready for the first, second, third meetings… (Your Angel tools to move them around the Angel Wheel of Yes…)

Should be your areas of focus when looking for investors.

And one last point – despite the changes, many angels invest in companies within 100 miles of where they’re based. Probably has something to do with the fact that investors are often ‘risk mitigators’ rather than ‘risk takers’. People (and angels are people too BTW) are prone to say ‘No’ when the risk seems to balance the benefit. The reality is that the benefit needs to be a multiple of the risk and you need to stack the proof as a way of giving as close to a guarantee as you can.

Here’s a weird recommendation – Learning the psychology of  creating offers in copywriting wouldn’t be bad idea for this part of the process. If that sounds strangely logical – here’s a course that might be worth taking a look at  – 3 Hour Copy

And how do Angels mitigate risk?

By meeting the company they considering investing in and seeing the white of their eyes and smelling their fear 🙂

So, arguably, any investor connections you make with twitter, facebook, whatever – beyond that 100 mile radius is just wasted effort.

Using that as a filter – this is where I would invest my time if looking for an angel investor:

My own network – friends, friends of friends, my social groups (Church, Sports, Wine Group etc), Alumni groups (School, College, military service)

Can you use twitter, facebook, linked-in etc as tools to mine your own extended local network – Abso-freaking-lutely!

But use these tools precisely – don’t – please – think that getting your message out to the whole world is going to get your an angel investor. It won’t. Leveraging your own network, finding the trusted advisor who will be your champion, will.

Let me know if I can help you go through this process and leave a comment or email me if you agree or not…

Andrew

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