5 Tips for Finding the Right Angels

“The first most fundamental thing I tell people is, it’s about building and leveraging relationships,” says Jeffrey Eschbach, a clinical assistant professor of strategy at the Kellogg School. “If you’ve got those in place, things just open up for you in a host of different ways.”

Eschbach offers five tips for identifying the angel investors who can best help your early-stage company.

Lay the groundwork

Before reaching out to potential angels, you need to make sure you are prepared to leave a first impression that puts you and your startup in the most positive light. This preparation includes building a polished online presence for yourself and your business.

“Make it clear that you are all-in on your startup idea,” Eschbach says. “If your LinkedIn profile doesn’t mention your startup, or the company doesn’t even have a website, funders will wonder how serious you are. Instead of just using a Gmail account, send emails from your company domain to indicate that the company is real. Have a clear, one-page executive summary ready to share when funders request more info. And building a simple website landing page takes only minutes but demonstrates your credibility and dedication to the company.”

You will also want to think through the size of your funding request before an opportunity ever presents itself. Because the amount you ask for carries so many implications—for investor expectations, the milestones your business must achieve, and the obligations you take on—it’s imperative to have a clear grasp of how much funding your business really needs. Rough estimates won’t cut it.

“You do have to do a little bit of calculating,” Eschbach says. “You cannot just make up a number that sounds right. You first need to determine what must be accomplished to look attractive for the next round of funding and then work backwards to figure out how much funding you actually need to do so. When a founder merely requests funding to extend their operating runway for another 12 months, I worry that they aren’t focused on clear results. I want to know what they plan to achieve—additional revenue targets, improved tech, new partnerships—by spending my investment dollars.”

By establishing your upcoming goals in detail, you can create a pitch that sets realistic funding amounts—and avoids pitfalls. Target too large of a raise and you may signal that you’re not scrappy—or that you don’t fully understand what needs to be tackled in the near-term and what can wait.

On the other hand, underfunding can leave your startup vulnerable to cash-flow problems at just the moment when you need more funding but you haven’t achieved the measurable results that justify a higher valuation and additional cash.

Finally, you should prepare documents that will help you respond immediately when opportunities arise. Have a concise and compelling pitch deck ready to tailor to your audiences. Have a “data room” or online folder with financials, key contracts, publications, articles of incorporation, and other documents ready to share with investors interested in conducting deeper due diligence. Being able to produce these further demonstrates your readiness for an injection of funding.

“At the end of the day, first impressions matter,” Eschbach says. “Looking the part with the right materials may get your foot in the door while others are shut out from the start.”

Lean into your existing networks

Cold outreach is well and good, but surveying the relationships you already have should be the starting point. By tapping into your own existing networks (and your network’s networks), you can expand your circle of potential investors without having to build every relationship from scratch. Advisors and mentors, for example, can provide valuable connections, as can others you’ve worked with throughout your entrepreneurial journey.

“Startup professors and startup attorneys can be great for making introductions,” Eschbach says, adding that these professionals may already have ideas about investors who might be a good fit for your vision. “I also encourage startup CEOs to find other founders who’ve received funding, as they can provide trusted intros to the angels who invested in them.”

Entrepreneurs who have engaged in customer discovery should revisit those contacts as well. This process, designed to refine the product-market fit, often brings founders into contact with people who can help in multiple ways.

“Of course, founders hope that discovery interviewees will eventually convert into paying customers. But if you ask, they can also be advocates, make introductions, or even become investors, especially if they know the pain point you’re solving firsthand.”

Create “intentional serendipity”

Every startup needs a bit of luck to survive. But it’s possible to manufacture serendipity for your company by actively placing yourself in environments where potential investors congregate.

In addition to following entrepreneurship groups and investor networks on platforms like LinkedIn, attending local events—such as networking meetups, pitch competitions, and industry-specific conferences—is one of the most effective ways to meet investors, who often attend these functions.

“Whatever city you’re in, you can find similar ones,” Eschbach says. “In Chicago, for example, the innovation hub 1871 hosts regular events, and the local universities host large pitch competitions that you can attend and network, even if you’re not competing.”

By consistently showing up in these spaces, you build a reputation for being an active and passionate entrepreneur. Volunteering at events organized by entrepreneurship organizations offers yet another high-impact way to build relationships

“Email the founder or organizers and ask if they need any volunteers,” Eschbach says. “Usually, the organizers are like, ‘Free labor? Sure!’ This gets you in the door to introduce yourself to potential funders at the event—and request intros from the organizers later.

Focus on the relationships

Once you’re connected to potential investors, the next step is cultivating relationships. Eschbach stresses the importance of starting with a conversation that shows you are interested in angel investors’ expertise as much as their ability to fund your company.

“There’s a saying in the funding world, ‘If you want money, ask for feedback. If you want feedback, ask for money,’” he says.

Simply requesting feedback lowers the pressure on both sides. When Eschbach was early in his entrepreneurial journey, he asked for feedback from a potential investor and received constructive criticism. He took the advice seriously, made adjustments, and returned a month later to demonstrate the improvements he had made.

By demonstrating coachability and incorporating feedback, Eschbach built trust and a sense of shared ownership in the startup’s success.

“This guy went from being a tough critic to my biggest proponent,” says Eschbach. “And he invested his money, all because we started with feedback first. If I had waited, and my first conversation was simply to request money, I would have instead gotten his feedback on why his answer is no.”

Another key to relationship building is consistency. Regular email updates on your business, even informal ones, can keep potential investors engaged and interested. This might include progress reports on milestones achieved and challenges overcome, and specific requests for introductions. These updates keep your startup top of mind and encourage your network to actively help.

Find the right fit

Not all angel investors are created equal, and one entrepreneur’s perfect angel is another’s nonstarter. The best ones align with your vision and bring value beyond their cash. And when you’re just starting out, it helps to seek out experienced funders.

“At the early stage, you just want to be around investors who know what early-stage investing is all about,” Eschbach says.

Angels unfamiliar with startups may offer well-intentioned but unhelpful advice. To mitigate these risks, due diligence is key. Reviewing an angel’s track record of previous investments, and talking to founders they’ve worked with, can provide insights into their investment style and approach to collaboration.

Once you’ve secured a meeting with a potential investor, gauge their approach to mentorship. Do they want heavy involvement, where you don’t? Or vice versa? Discussing financial expectations is critical, too, particularly around timelines and returns. Ensuring investors understand the long horizons typical of startup investments—where returns can potentially take seven to ten years to materialize, if they even happen at all—can prevent misaligned goals later.

“Even though you’ll work hard, angel investors need to mentally assume the money’s gone,” Eschbach says. “With startups, there may never even be an exit, and they have to be 100 percent comfortable with that.”

And if warning signs emerge during these conversations, it’s often better to walk away. Courting someone who is tapping the last of their 401(k) to invest is a risky situation that you’ll want to avoid.

“If you don’t like the expectations or terms, you can keep looking. If an early investor demands a board seat, for example, that is a red flag. I always seek accredited investors, as they have the wherewithal to handle a potential loss.”