// Funding Guide
Angel Investment: How to Get Your First Check
Angel investors are high-net-worth individuals who invest their own money in early-stage companies. They typically invest $25K–$500K in exchange for 5-25% equity. Here's how the process works — from finding angels to closing the deal.
What Angels Look For
Angels invest in people first, ideas second. They're betting on you before the business proves itself. Most angels evaluate four things: the founder (can you execute?), the market (is it big enough?), the traction (any proof this works?), and the terms (is the valuation reasonable?).
Unlike VCs, angels don't need a billion-dollar exit to make money. An angel who invests $50K at a $1M valuation and you sell for $5M is thrilled with a 5x return. This means angel-fundable businesses include profitable service companies, niche SaaS products, e-commerce brands, and local businesses with expansion potential — not just moonshot tech startups.
Where to Find Angel Investors
Angel groups. Organized networks of angels who review and invest together. The Angel Capital Association (ACA) lists groups by state at angelcapitalassociation.org. Apply to present at their monthly meetings.
AngelList. The largest online platform connecting startups with angel investors. Create a profile, share your metrics, and connect directly with investors.
Industry events and accelerators. Demo days, pitch competitions, and industry conferences are where angels actively look for deals. Y Combinator, Techstars, and local accelerators all include investor introductions.
Your network. The majority of angel investments come through warm introductions. Tell everyone you know that you're raising. Ask your mentors, advisors, lawyers, and accountants if they know potential investors. The best intro is from someone the angel trusts.
Start building relationships with potential angels 6-12 months before you need money. Send monthly updates to people you'd want as investors — even before asking for investment. Share wins, metrics, and challenges. When you do ask for funding, they already know your story and your trajectory. Cold pitches close at 1-2%. Warm relationships close at 10-20%.
The Pitch: What to Cover
Keep your pitch deck to 10-12 slides: problem, solution, market size, business model, traction, team, competitive advantage, financials, the ask (how much you're raising and what you'll do with it), and terms. Practice until you can deliver it in 8 minutes. Every extra minute you take is a signal that you can't communicate concisely.
The single most important slide is traction. Revenue, users, growth rate, signed contracts, letters of intent — any evidence that someone is willing to pay for what you're building. No traction means you need a spectacular team and a massive market to compensate.
Understanding the Terms
SAFE notes (Simple Agreement for Future Equity) are the standard instrument for early-stage angel investment. Created by Y Combinator, they're simpler than convertible notes — no interest rate, no maturity date. The angel invests now and receives equity later when you raise a priced round. Key terms to negotiate: valuation cap (the maximum valuation at which their investment converts to equity) and discount rate (typically 10-20% discount to the next round's price).
Convertible notes are debt instruments that convert to equity. They include an interest rate (typically 2-8%), a maturity date (12-24 months), a valuation cap, and a conversion discount. More complex than SAFEs but still standard for angel rounds.
Priced equity rounds are less common at the angel stage but do happen. The angel buys shares at a set price per share, establishing a formal valuation. More paperwork and legal costs, but cleaner terms.
Don't set your valuation too high to impress angels. A $10M valuation on $0 revenue means you need to grow into that valuation or your next round becomes a "down round" — which dilutes early investors and destroys trust. Pre-revenue companies typically raise at $1M–$3M valuations. With $10K+/month revenue, $3M–$8M is defensible. Let the market set your valuation based on traction, not ego.
After the Investment
Send monthly investor updates. Every month. Without exception. Include: key metrics (revenue, users, burn rate), wins, challenges, what you need help with. Investors who feel informed are investors who make introductions, provide advice, and invest in your next round. Investors who feel ignored don't write follow-on checks.
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