Angel Investors 101
Your crash course on who they are, how they think, and how to win them over.
Got a great idea, a prototype, and three users, two of them your cousins? What you don’t have is cash. Enter: angel investors.
They’re not divine beings, but when you’re broke and building, they can feel close. Still, pitching to them can feel like speed dating if your date asked about your burn rate instead of your playlist. Read the full article, Angel Investors 101: What First-Time Founders Need to Know, to get the complete lowdown on approaching angel investors the smart way.
Let’s break it all down. Who they are, how they operate, and how to approach them without sounding like you just learned what “equity” means yesterday.
Who Are These Angels, Anyway?
Angel investors are typically high-net-worth individuals who invest their personal money into early-stage startups, usually before VCs even start returning your emails. They’re often ex-founders, seasoned execs, or professionals with a little cash, a lot of curiosity, and a desire to back the Next Big Thing.
Think of that retired founder who scaled and sold a B2B SaaS company and now wants to mentor scrappy upstarts in the same space. Or the doctor who’s been quietly investing in medtech startups because she sees the inefficiencies firsthand. In one startup I know, a local coffee shop owner invested $20K in a food delivery app after seeing a massive uptick in orders during lockdown, not because he was a tech guru, but because he understood the market on a gut level.
They’re not writing $10M checks, but they might throw in $10K–$250K, often faster and more personally than a traditional fund.
What Do They Look For?
Angels aren’t just betting on your business; they’re betting on you. You can have a half-baked prototype, a landing page, or even a super early idea, but if you pitch with clarity, energy, and a real plan, you’ll turn heads.
They’re looking for:
● A compelling founder Are you obsessed? Resourceful? Coachable?)
● A real problem with a believable solution (Bonus if they’ve experienced the pain point themselves)
● Some traction (Could be $5K MRR, 300 signups, or even a waitlist of 1,000 users, whatever proves you're not all talk)
● An actual business model (Free apps with no monetization in sight? Hard pass.)
One founder I spoke with landed an angel check after showing screenshots of DMs from people begging for early access to their product. The angel didn’t even flinch at the pre-revenue status; they saw demand, grit, and hustle.
How Do You Find Them?
Spoiler alert: they’re not lurking in the shadows waiting to throw money at you.
You find angels by:
● Tapping your extended network (Think: second-degree LinkedIn connections, startup friends, alumni circles)
● Attending local pitch events or demo days where angels casually sip wine while secretly judging pitch decks
● Getting warm intros through people they trust. Cold emails can work, but warm intros almost always win.
For example, one founder I know reached out to a guest speaker from their university's entrepreneurship club, followed up after the talk with a crisp one-pager, and got a $25K commitment by the next week. Another got their first angel through a mutual connection on Twitter after replying to a thread about bootstrapping.
The key? Be respectfully persistent. Angels want to feel like they discovered you, not like you spammed every investor list on the planet.
What Kind of Deals Do They Offer?
Angel deals are usually simple, fast, and early-stage-friendly. Most angels aren’t trying to bleed you dry or drown you in legalese; they just want a fair shake.
Most common instruments:
● SAFE (Simple Agreement for Future Equity)—They give you money now, and it converts to equity when you raise a priced round. No valuation drama, just clean paperwork. For example, someone invests $50K on a SAFE with a $4M cap. When you raise next, they get equity based on that cap.
● Convertible Note—Similar to a SAFE, but technically a loan that converts to equity later. Sometimes includes interest.
● Straight equity—Less common at pre-seed, but happens if the investor wants actual shares right away.
One early-stage founder raised $100K from three angels using SAFEs each with slightly different caps depending on when they committed. The first $25K check came in at a $3.5M cap, and by the time the third investor joined, they negotiated a $5M cap due to traction updates. Flexible, founder-friendly, and fast.
How Do You Approach an Angel Without Screaming "Newbie"?
If your opening line is “Hi, I need money,” we need to talk.
Instead:
● Lead with value and vision. “I’m building a platform that helps remote teams streamline product feedback. We just hit 500 weekly active users after launching last month.”
● Ask for advice, not money (at least at first). “We’re refining our acquisition strategy. Would love your take given your experience with B2B SaaS.”
● Have a short deck or memo ready. Keep it under 10 slides, clear as day, and focused on what matters: the problem, your solution, traction, team, and the ask.
And follow up like a pro. If they ghost you after one call? Send a short update 30 days later: “Just launched V2 of the product, 3x conversion, 20% MoM growth. Still raising.” Keep them warm without being pushy.
What to Watch Out For
Not all angels are, well… angelic.
Some red flags:
● They ask for huge equity chunks up front
● They want operational control (you're not hiring a boss, you're raising capital)
● They’re vague or slow to commit, dragging things out for weeks with no movement
If someone wants to “mentor” you for a piece of the pie without investing or keeps asking for just one more call, trust your gut. The best angels are quick, clear, and founder-first.
Let’s Wrap it Up!
At this stage, it’s not just about the money; it’s about who’s on your cap table.
A good angel will open doors, spot blind spots, and ride the rollercoaster with you (screaming included). So pitch with passion, prepare like a pro, and choose partners who believe in you as much as the vision.
Need guidance to find and secure the right investors? Visit Leadpreneurs for expert support and resources tailored to help you raise smarter.
Thank you for reading and trusting us to be part of your startup journey. Now, go make those connections and turn your vision into reality!
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