In Chapter 5, I discussed the critical first part of angel investing: seeking exciting potential companies in which to invest, and building your top-of-the-funnel deal flow. We went through a host of places you could visit proactively to find investment targets, from personal connections and meetups to angel groups and Demo Days. But while the world's best VCs and “super angels” spend serious time prospecting for deals, they have an even easier way to find cool companies: they sit back and wait for the companies to find them.
How (and why) will companies come looking for you as an angel if the ecosystem—as we saw in Chapter 15—is so big and has so many things going on? Precisely because you will jump right in and take an active part in that same ecosystem! In an age of online communication, 24-hour news sources, and social networks that tie together a majority of the planet's population, there are myriad opportunities for you to establish such a presence for yourself that companies will seek you out. Here are some ways that you can build your reputation as an angel investor.
If you want to be found, start by raising your hand! Companies looking for funding are searching for potential investors as least as actively (and usually more) than you are searching for them. Make yourself easy to find by writing up your background, your investing thesis, and your contact information and disseminating them widely in the places that cool startups will be looking.
Setting up your free investor profile on Gust is the logical first step in this direction, but why limit yourself? You should also create (and keep updated) profiles and entries for yourself in reference sources such as Wikipedia (if you are notable enough) and Crunchbase, social networking sites such as LinkedIn (mandatory), Facebook, and other funding platforms such as AngelList and CircleUp. The more relevant information you include, the easier you will be to find.
Some of the best known VCs and angel investors earned that distinction because of their original writings related to the startup world. While you may not think that you have as much to offer to entrepreneurs and to your fellow investors as industry thought leaders like Fred Wilson, Mark Suster, or Naval Ravikant, the fact is that, to a large extent in this connected world, “If you write it, they will read it.” Of course not every entrepreneur is going to read every blog, but you would be amazed at how much name recognition you can develop simply by writing regularly, intelligently, and helpfully about an area in which you have something useful to say.
Startup founders are thirsty for advice and guidance about business in general and startup funding in particular. Writing a regular blog (you need to write regularly, not sporadically) is an excellent way to show entrepreneurs (1) that you are smart, (2) that you are helpful, and (3) that you are interested in hearing about companies in specific areas or industries.
I've included a list in Appendix H of a selection of blogs written by and about angel investing, which will provide you with good examples of investors doing exactly this, and give you invaluable insights into the thoughts of some of the industry's leaders.
For many people, blogging can be intimidating. They find it frustrating to stare at a blank screen and wait for inspiration to strike. Luckily, the Internet can save the day. There are many websites where entrepreneurs and others in the startup world congregate to have discussions with, or—even better—ask direct questions of, investors. In virtually all of these cases, the normal Internet participation metrics of 90/9/1 apply: roughly 90 percent of visitors simply read the contents, 9 percent ask questions or participate by voting on the quality of answers, but only 1 percent of users will actually take the time to write an answer. The interesting statistic, however, is that for every one person who writes an answer, 99 people are likely to see it and be influenced.
The most popular and useful of these question-and-answer websites is Quora.com, founded in 2010 by two former Facebook employees. With millions of users, many of them interested in the world of startups, it has become a great source of information about early-stage company building, angel investing, and venture capital. Among the investors who have answered questions on Quora are Dave McClure (500 Startups), Mark Suster (Up Front Ventures), Marc Andreesen (Andreesen Horowitz), Shervin Pishevar (Sherpa Global), and Reid Hoffman (Greylock), as well as dozens of active angels.
In fact, that's how this book came about. I regularly answer startup and angel investing questions on Quora, and the folks at Wiley realized that scattered among my 2,000-plus answers was probably enough information to make a book—which is what you're now reading.
To see and be seen by local entrepreneurs, hang out in the same places they do. Whether by attending local startup-related Meetups, going to lectures and events featuring entrepreneurs or investors, or participating in open houses and demo days at incubators or accelerators, the more visible you make yourself, the more founders will think of you when it comes time for them to raise money.
Every business-plan competition needs judges, every accelerator needs mentors, and every startup event needs panelists and speakers. Because of the desire for information and updates on the world of early-stage investing, there is an equivalent need for speakers, judges and panelists on the topic. If you seek out the organizers of such events, you will find that they will likely welcome your participation and be grateful for it. The more you speak, the more you will become known as a speaker, and the more invitations you will receive to speak. It's a virtuous circle of reputation enhancement. Speaking and judging not only expose you to entrepreneurs with interesting startup companies, but also establish you as an authority (why else would you have been chosen to speak or judge?)
Perhaps the best way to develop your reputation as a value-adding investor for startups is to add value to startups. Brian Cohen is now a well-known angel investor (he was the first angel to discover Pinterest), but his initial steps into the field were as a pro-bono advisor. When he first joined New York Angels, he offered to help any of the group's portfolio companies that might benefit from his advice and extensive experience as an entrepreneur and strategic communications expert. Quite a few companies took him up on this, even though he had not invested in them and had no financial interest in their success. But word spreads quickly, and soon other startups were approaching him directly, looking both for his wisdom and his investment.
What is absolutely critical about giving advice, however, is that it be done with no direct expectation of financial return. There are many self-proclaimed advisors/mentors/Sherpas who pitch their services to startups in exchange for fees, equity, or other compensation. While I'm sure that they make a few bucks from this, I guarantee you that it does nothing whatsoever to enhance their reputations, either with startups or with other investors. But those people who are genuinely helpful to entrepreneurs even when they do not receive direct financial benefit soon develop a significant reputation, find themselves invited into interesting opportunities, and get to play with the cool kids. Besides, it is usually quite gratifying.