Starting a Business

You Can Still Find an Angel Investor

There will always be angel investors, in good times and bad.
Magazine Contributor
2 min read

This story appears in the May 2009 issue of Entrepreneur. Subscribe »

I can't read any more articles about how angel investors are supposedly abandoning entrepreneurs during this recession. In my view, it's neither true nor what I have observed, despite the media hype. There will always be angel investors, and there will always be entrepreneurs--in good times and bad. The main difference is that it takes much longer to raise money in recessionary times. Entrepreneurs have to deal with rejection more often and expand their pipeline of investor leads. Here are three keys to finding your own angel.

  • Resilience is rewarded. Dealing with rejection is nothing new for most entrepreneurs. When I raised money from angel investors in the last recession, I was turned down twice as often as I was encouraged to have a second meeting with an investor.
  • Persistence is rewarded. It's also important to have a systematic approach for dealing with investor objections. For example, the most common form of objection in today's market environment is some variation of "I don't want to liquidate my stock market investments to invest in something new," or, "This is not a good time for me to make investments." A good response would be, "Are you convinced each of your stock market investments will outperform an investment in my startup?"
  • Patience is rewarded. Building your investor pipeline over several months is critical to raising money under these conditions. Many entrepreneurs don't like to raise money, and they don't think about it like prospecting for new clients. The truth is that it's very similar. You need to make a prospect list, manage it with a contact management database and send periodic updates to investors to deepen the relationship over a period of months. It takes time to raise money, and entrepreneurs are usually in a rush.

In 2007, angel investors were interested in hearing a pitch about revenue growth, and the decision to invest involved some amount of fear of losing the opportunity. In 2009, angel investors want to hear you tell them about earnings growth, and the decision to invest is based on how much affinity they have for the business concept and the principal owners. But no matter the year, the goal of your first meeting with an investor is to get a second meeting. Resilience, persistence and patience will ensure you get enough first meetings and second meetings to meet your fundraising goals.

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