How to Raise Angel Funding

Raising money is not a requirement for growing a successful company. There are plenty of examples of startups that have bootstrapped or used more traditional financing (i.e. loans) to grow, like Mailchimp and Basecamp.

However, raising angel or VC funding is a necessary path for certain startups– particularly when the business model doesn’t have a quick path to profitability or if the startup is ready for accelerated growth.

Before deciding to raise money, it’s important to think about the tradeoffs: with investors come increased pressures for growth, other cooks in the kitchen, and less ownership (note: there are positive aspects of all of these things as well).

Raising money isn’t inherently good or bad – but there are certainly two signs of the coin:

  • Raising money takes a lot of time
    • Pro: You’ll get a lot better at communicating your vision for the business to other stakeholders
    • Con: It’s a distraction from your core business
  • You give away equity in your company
    • Pro:You gain new investors who are invested in your success and can help you
    • Con: You have less equity and will make less in the event of an exit
  • There’s more pressure to deliver on a certain outcome
    • Pro: You will be pushed to maintain a growth mindset, which can result in building a bigger company
    • Con: The definition of an “acceptable outcome” changes (you will likely need to exit at some point) and you will feel more pressure

In this post, we’re going to be talking specifically about raising an angel round, which is the first investor money first-time founders raise, almost entirely from wealthy individuals. Angel rounds can range anywhere from $100K-500K, and may be referred to as “Pre-Seed” rounds. These days, a Seed round will usually be in the $500K-$2M range, and include at least a single institutional investor (like a VC firm). Raising from institutional investors is a different ballgame. While some of the lessons here do apply to Seed rounds, we’re going to focus on the Angel round.

Here’s what we’ll cover:

  • The Narrative

  • Terms

  • Materials

  • Fundraise Amount

  • Tactics

This post is just a primer: there’s a lot more information out there about fundraising, but these are the less obvious things that I learned along the way, having raised two angel rounds for a combined $800K.


Build your narrative based on milestones: Talk about what you’ve accomplished, what those accomplishments prove, what the next big milestone will be for the company (which this round will enable), and what accomplishing that future milestone will open up, tying that into your big vision. Especially since you’re at the early stages, defining milestones around your business will help potential investors understand where you are and where you’re going. Here’s an example of what a condensed narrative could look like

We have 40 power users each paying $50/month with a Net Promoter Score of 80, so we know that we’ve built a product that a core group will love and pay for. Without a focus on marketing, we’ve had modest growth in the past few months without any churn. We’re seeing that users want more powerful features and are willing to pay more for them, so we need to focus on engineering to meet some of these demands. We’re raising $300K to reach $10K MRR with 200 users. At that point we’ll be able to grow into new verticals. This will allow us to capture x% market share in a growing market and become the market leader in xyz.

Note: this neglects other elements that need to be in your deck, like go-to-market strategy, competitive landscape, team, etc. The purpose of this example is to illustrate how to talk about milestones.

Create a narrative that can remain true even if the fundraiser stops working on the business: It’s true what they say– fundraising is a full-time job. One of you will be spending all of his/her time on it. Therefore, you need to have a fundraising narrative that holds true even if the fundraiser stops working on the business for 3+ months. As a counter-example, if the CEO is also the sole salesperson, he/she shouldn’t create a narrative around month-over-month growth in sales (it will be nearly impossible to fundraise and make that narrative remain true at the same time).

Explain the reality of the business, not the one you thing investors want to hear: While fundraising is about selling, you should create a narrative that’s based on where the business currently is, and the obstacles it needs to overcome. Good investors understand that there are going to be challenges. By including the reality of the business to date in your pitch, you’ll feel more comfortable fundraising. Alternatively, if you think the current state of the business isn’t something you’re comfortable selling on, then focus on hitting an important milestone before you set out to fundraise.

For more tips on how to create a narrative or your pitch deck, check out Dave McClure’s template


Financial Instrument: If you’re trying to raise equity, it should be with Convertible Debt or a SAFE (simple agreement for future equity). These allow you to get money in the bank as you go, rather than soft-circling money until you close. Additionally, these methods are a lot simpler than a priced equity round, where you need to issue stock, value the company, and deal with certain regulatory requirements (this is operationally a lot more complex and expensive). At this stage of a startup, valuation is essentially made up, and these structures essentially kick the can down the road so that a true valuation can be made at a certain date. You can learn more about convertible debt here, and more about SAFEs here.

Create a (large) minimum check size: When I raised angel funding, our minimum check size was $25K, and we made occasional exceptions for friends and family. I received this advice from a fellow entrepreneur who had a minimum check size of $10K. When he was raising money, he found that some of his angel investors were not price sensitive, but defaulted to the minimum investment. If he’d told them the minimum was $25K, then they would have invested $25k instead of $10k. This also simplifies the decision of “how much to invest” for people, so that they can quickly make a decision. They will often think in multiples of your minimum amount, so if it’s $25K, then investors will likely think roughly about $25K, $50K, $75K, or $100K checks. It also gives you a really easy answer to the extremely uncomfortable question (which is a good one to receive): “How much do you want?”

Determining your valuation cap (for Convertible Debt): At this stage, it’s all made up, but you could rationalize anything from $2-4M. Do be conscious that if you plan to raise another round, you’ll want it to be at a higher valuation, so there’s a little more risk and pressure in raising at a higher cap.


Presentation Deck: This is a version of your pitch deck that has little text and that you’ll use for live or over-the-phone pitches.

Email Deck: This is a version of your pitch deck that’s for reading, not presenting. This is a version of your deck that you can send to potential investors to read on their own time before a meeting, or to send as a follow-up after pitching someone in person or over the phone.

For more information about Email Decks vs. Presentation decks, read this article.

Financial Projections: You should have an excel model that shows the key business and financial metrics to date, along with future projections. You can find some good startup financial projection models at Foresight.

Other marketing materials: depending on who you’re raising from, you may be asked for a 1-pager, business plan, or a different type of marketing materials. This should contain roughly the same information as your pitch decks, but may have more or less detail.


Determine the amount to raise: Figure out what your next milestone is (e.g. $20K MRR). From there, work backwards and figure out the resources you’ll need to get to that milestone (including new employees and any other investments or expenses). Ensure you have at least 18 months of runway to hit that next milestone.

Avoid awkward amounts: If you’re under $350K, then you’re going to need to raise solely from friends, family and small angels. Angel Groups and even pre-seed stage VCs only write checks that start around $150K-200K, and they won’t want to be half of your round. If you intend to raise from any institutions (VC’s, Angel Groups, etc.), your fundraise should be north of $500K.

Try to oversubscribe: Suppose you determine that $350K will help you get 18 months of runway by the skin of your teeth. Go out to raise $350K (you should feel confident that you can close on that). Once you hit $350K, then use the fact that you’re “oversubscribed” to get any potential investors on the fence to see that the train is leaving without them. You can then leverage this FOMO by leaving the round open for a finite amount of time (e.g. 30 more days) or accepting a finite amount of additional funding ($100K more). By creating this scarcity, you may be able to close a handful of investors who were on the fence or waiting for the right signal to invest.


Have your first investor before you start reaching out to investors: if you have your first check before telling people that you’re raising money, then you’re asking them to jump into a moving car rather than telling them to help you push start it. This is great signaling and will allow you to get momentum right away. Early on, you should be focused on getting that first investor who will make it easier for the other investors to jump in.

Create scarcity/urgency with each investor: investors are incentivized to wait as long as possible to invest. Therefore, you need to try to drive them to 0 or 1 as quickly as possible, and make them realize that the train is leaving the station, with or without them. This is a lot more of an art than a science.  

Ask for advice to get money. Ask for money to get advice: Your angel investors will want to be helpful (and you should want them to be helpful as well). If the potential investor you’re pitching is not a bonafide angel investor, then it’s best to ask for advice in your conversations than to go in for the kill right away. Asking for advice will enable them to provide value, which could result in really good strategic advice, introductions to other investors, and potentially an investment from them. If the conversation has been mostly about advice and you find yourself wanting to make the “ask” towards the end of the conversation, make the transition by saying something like, “Thanks so much for your help. I’d be remiss if I didn’t ask– would you be interested in investing?” This is a very natural and polite way to make the ask. Even if you are speaking to someone who invests frequently, if you can start by seeking their advice, you’re going to get a lot more value out of the connection than if you ask for money right away. On the other hand, if you’re pitching a more seasoned angel investor who makes frequent investments, it’s best to just be direct – they know why you’re talking to them.

Beware of September and December: A lot of people (especially wealthy people) are on vacation during September and December. Try to time things so that you’re not dependent on a potential investor being around and active during September or December (because they likely won’t be). Things will generally come to a halt during these months.

Where to find Angel Investors

Start with friends and family: Some may want to invest, but you may be surprised how many people may know someone else who’s an investor. Regardless, if you’re at a point where you’re ready to start getting investors, then all of your friends and family (even colleagues from a while back) should probably know what you’re working on. You’ll be surprised at how many people may be able to connect you to an investor, a partner, or even a customer.

Find investors with overlapping affiliations: Finding alumni from your alma mater is a good place to start, but the more layers of overlap with affiliations, the better. For example, a fellow alumni who played the same sport as you, lives in your current city, or was in the same fraternity/sorority deepens the connection and would make the person much more willing to spend time talking to you. You can pretty easily find this by asking people in the Alumni Affairs at your Alma Mater, or by using AngelList.

Ask for advice from successful founders/CEOs: Talk to founders and former CEOs of successful companies tangential to your space. Tell them that you’re growing and earnestly ask them for advice and try to extract value from the conversation. In your follow-up, you can gently let them know that you’re raising a round and ask them if they know anyone you should talk to. They very likely might know someone, and they may even want to invest themselves.


If you’ve never fundraised before, it’s going to be uncomfortable and difficult.

If you believe in your business, your narrative, and that your business needs and deserves investment, then ignore the imposter syndrome and get to work fundraising. I didn’t feel like I was ready to fundraise when I started. The truth is that few people ever feel ready before they start.

Asking for 5 or 6-digit checks may seem jarring, but the truth is that if you’re talking to the right investors, this is what they do.

Fundraising can be an incredible opportunity to get amazing new people involved in your business and accelerate growth. That said, it will also change your relationship with your business, so make sure you’re fundraising because you think it’s the right decision, not because it seems like everyone else is doing it.

Any other questions on how to raise angel funding? Shoot me an email at

Mike Wilnerfundraising