13 July 2011

Hacking Angel List

7 Tips For Raising Startup Capital

AngelList is an amazing thing.  No, let me rephrase that-- AngelList  is a freakin' phenomenon. 

Since launching just over a year ago, 2,250 investors have joined, over 400 startups have raised money, and according to co-founder Naval Ravikant, about 20 new inbound companies per day sign up.


In case you’ve been adrift at sea for the past 9 months and have no idea what I’m talking about, AngelList is a hugely-successful online service that matches early stage companies with angel investors.  It is similar in concept to a “stock market for startups” where privately held companies post information about their businesses and a filtered list of angels, HNW individuals, and VCs can follow the companies, take intros, and ultimately invest.

I’ve had two portfolio companies “list” on AngelList, and I’ve also started wading in as an investor member.  In addition, I have another two startups that are getting ready to raise funding rounds, and AngelList will likely play a very big role in our capital raise strategy.  As these startups get ready to make their debut, I thought I’d synthesize a few observations, tips, and suggestions for making the most of this powerful new funding vehicle. To wit:

1.  Land a lead investor before going live.  This is the best tip I can give, yet the hardest one to achieve.  Nonetheless, it’s critical for success, as AngelList is a momentum-driven platform where “hot” deals get hotter, but the unwashed masses (without any existing investors) often stall or are neglected.  This could eventually change, and I do believe Naval and gang are working hard to create a system where any quality startup-- even “raw” companies-- can raise money on the system.  But at present, AngelList is more useful as a tool to pour fuel on an already-burning fire, than it is to get the fire lit.  In other words, use it to round out a round vs. trying to source a new round.

Granted, getting the first domino to topple is usually the most difficult part of the game-- as a rough proxy, plan on spending 80% of your time and effort closing Investor #1, and the remaining 20% locking down the rest.  As needed, be ready to offer sweetheart terms to the first person to take the plunge.  In short, do whatever it takes to make sure the “Current Investors” field on the AngelList application form is not blank when you go live.

In addition, you get massive bonus points on AngelList if your lead is “someone who has done something”-- in other words, an investor who is not your dad or your dentist, but a recognizable personality or industry expert.  Here’s why: I believe that the long tail of investors on AngelList are paying close attention to what the “head" investors are doing; in other words, of the 2,250 angels, perhaps 10% are very actively taking intros, making comments, and otherwise generating buzz for certain startups, and the other 80-90% tag on when a startup starts to heat up.

Thus, there is tremendous marketing value in a name brand lead, and the more effort you put into finding one-- even if s/he is investing a relatively small amount-- the easier the rest of the process will be.  A good place to start is the first 3 or 4 pages of this list here, combined with LinkedIn's "How You're Connected To..." function.    

UPDATE / COUNTERPOINT Naval responds: "Thanks for this. I vehemently disagree with this first point, though :-) The majority of companies-- probably even 75%-- that we send out now and raise money have no lead and often no investors, e.g. .  It's just that companies that don't have something else obviously special about them need that to get past our bar.  The rest of this post is pure gold. The conveyor belt and watering hole analogies are spot on."    

2.  Focus (a lot more than you’d expect) on building “social proof.”  When you list your startup on AngelList, you populate fields such as Company Description, Traction, Management Team, and so on.   Many of these fields are similar to the information displayed on Google Finance or Yahoo Finance for a publicly traded company.  But one very clever field you’ll find only on AngelList is a category called “social proof.”  This is where you name drop key people, both inside and outside the company, who are involved-- Advisors, Referrers, Endorsers, and Current Investors.

This is a hugely important field, for two reasons.  First, unlike a publicly-traded stock, most startups do not have much (if any) revenue, profit, or other financial metrics for investors to analyze and compare; thus, angels are relying on “who you know” as a filter (and presumably, are assuming that someone among this bunch has done their due diligence).  Second, due to the sheer number of startups listing on AngelList, it is efficient for investors to filter for those that have attracted name brand folks.  Spend the time and legwork to connect with influencers who can signal that your startup is In With The In Crowd.

But don’t stop there-- prod your social proof folks into action.  Get them to generate buzz on the site and amongst their peers.  Have them promote you using the Follow and Share buttons, and have them Comment on your status (feed them soundbites to talk about, if necessary).  As with other social networks, these actions get pushed out to their followers, and they may be amplified if Naval or another AngelList uber-member “likes” that comment.  In short, get your social proof points talking.  

Let me give you a quick example using one of my advisory clients, a startup called Zerply.  Zerply worked it pretty hard and did almost everything right to generate positive social proof:
  • Jonathan Nelson, founder of the networking group Hackers & Founders, originally referred us in --> instant street cred
  • The team met Naval at an event, and he sent out a “cultivated email” to an initial group of hand selected investors --> very valuable initial buzz and endorsement
  • Startup networker guys like Adam Rifkin and Brendan Baker became Endorsers and commented on Zerply’s profile --> more buzz, particularly among these users’ followers
  • Zerply's CEO Christofer kept the company's profile updated with current screen shots and traction metrics --> demonstrating both business momentum and the team’s design prowess
  • I and another advisor Nicolai added a few Comments such as an announcement of some NY Times coverage --> further reach within the AngelList news feed
  • A few prominent angels including Dave McClure put in money, and were added to the profile --> additional credibility, momentum, followers, intros, etc. 
...And so on; momentum begets momentum.

3.  Stand up, stand out, and get noticed.  When I initially explain AngelList to founders who are considering it, I use the metaphor of a fast-moving conveyor belt loaded with startups rolling past a line of angels who are scanning them as they go by.  It’s a highly-efficient system, yet the trip down the belt goes pretty quick, and if your company doesn’t get noticed and plucked out of the masses by an interested investor (or three), you’re dumped into a bin at the end of the line and are quickly buried under the avalanche of new startups in the queue behind you.  It is then very difficult to claw your way back to the top of the pile.

This happened with one of my startups in the social marketing space-- we went out with no lead, and with a ho-hum profile.  Traction was good but not outstanding.  The product demo was still a work-in-progress, and we only had one other advisor (aka social proof point) involved.  As a result, that company was ignored on first pass, and it took an extraordinary level of hustle to generate enough interest to close the seed round.

Appearances and presentation count.  I suggest you learn from our mistakes.  To do so, make sure that:
  • you show Screen Shots that are compelling, and your links point to stellar demos (that are not password protected)
  • you have Traction Stats that are meaningful, and that tell an up-and-to-the-right story
  • you frame said Traction Stats in a compelling manner, and you dress up your profile with eye-catching charts and graphs showing your momentum 
  • you portray each co-founder in a favorable (and well-rounded) light, with bits from your bios that prove credibility and an ability to execute
  • you have recruited Advisors, Endorsers, a recognizable Referrer, and ideally, a Lead Investor.  
  • you have set your valuation and raise amount in the sweet spot of the majority of investors on the system (e.g., a $500k - $750k raise at a $2m -$6m valuation) 
  • you get a quote from Robert Scoble or another accessible-yet-trusted entrepreneur as the icing on your profile cake.
Doing this work upfront-- before going live-- will make your profile “pop” and as a result, you’ll be hard to ignore.  Call it "peacocking for the investor mating dance."

4.  Pare your company down to its “Hollywood pitch” soundbite.  As mentioned, there are simply so many quality startups running through AngelList that it’s critical to have something unique in your pitch-- something that spurs investors to stop and take a closer look.  In short, you need a hook.  For many popular startups on AngelList, the format that works well is similar to the Hollywood pitch, where new movie concepts are sold to studios by references or mash-ups using the familiar-- e.g. it’s “Ghostbusters meets Waterworld.”

In the startup world, this becomes “We are Airbnb for puppies”.  This approach does seem to be quite effective, and the shorter the hook is, the more memorable it becomes and the less friction with which it spreads among investors.  Just be on the lookout for any investor soundbite fatigue (comparisons to Uber, Pandora, and Airbnb all come to mind).  Further, as HubSpot CEO Dharmesh Shah recently tweeted, “Saying you are [x] of [y] is shorthand for describing your startup; it’s not really a long-term strategy.”

As an alternative, consider using a super-short description of what you actually do, e.g. MogoTix is "Simple, social, secure mobile ticketing."  Another approach is to have a teaser that doesn't actually say that much, but is very intriguing; e.g. TracksBy is "The most viral way to launch music" or Pipedrive is "If Apple designed Salesforce."  Clever.

5.  Tweak your profile, tweak it again, then tweak it some more.  Startups can game the AngelList system somewhat by making frequent changes and updates to their profile information.  Essentially, when you update something, it shows up in the News Feed as “Acme Corp updated their profile” and you can get viewed again.  However, I’d suggest that startups not overplay this card, which would quickly become annoying to your followers and prospective investors.  Update your profile frequently, but only when you have actual, real news to report (e.g. you’ve just added another 10k users or inked a distribution deal with Oracle).

6.  Do (at least) one thing exceptionally well.  Naval covered this point beautifully in a recent talk he gave to the Founder’s Institute members called “Anatomy of the Fundable Startup."   Here’s the nut of his message:  “investors are trying to find the exceptional outcomes, so they are looking for something exceptional about the company. Instead of trying to do everything well (traction, team, product, social proof, pitch, etc), do one thing exceptional. As a startup you have to be exceptional in at least one regard,”  Of these five categories: (1) Traction, (2) Team, (3) Product, (4) Social Proof, (5) Pitch/ Presentation, which ones do you have?  What can you work on prior to debuting on AngelList?

7.  Use AngelList as a resource for self-directed hunting.  Despite your best efforts and despite following these tips to the letter, there’s still a good chance you might not get much attention on AngelList.  Indeed, quite a few interesting startups generate just a few follows or comments, but not that many intros.  Others are more or less ignored.  In short, investor interest is not distributed evenly on AngelList; rather, it tends to cluster around a couple dozen companies.

If interest in your startup is lackluster, then take the matter into your own hands, and go on an active hunting trip.  AngelList is quite possibly the single largest and best collection of angels, all gathered in one place-- like a watering hole on the African Savannah, “all the great animals” are here.  Thus, why not use this resource to research profiles of money folk, form a short list, craft a really poignant and targeted intro, and go after these angels directly instead of hoping they notice you?  Ideally you can use your personal network, attorneys, advisors or LinkedIn to find a warm intro; significantly less likely, but still possible, is to form a connection on Twitter or a cold email.  Regardless of the form factor, put them on your radar, and there’s a good chance you’ll find a way to get to them.  Don't just passively wait to be discovered.

Bonus Tip:  Create a catalyst to close the deal.  This tip applies broadly to raising capital vs. being purely AngelList-specific, but it’s worth mentioning.  Second only in difficulty to landing that first lead investor is wrangling the rest of the cats toward a signed term sheet.  Investors drag their feet.  As long as they're not at risk of getting bumped from a deal-- and assuming that the valuation is not skyrocketing--  it is in most prospective investors’ best interest to watch and wait as long as possible before actually handing over the check.

Thus, it helps to have something on the horizon that will encourage investors to get off the fence.  Setting an artificial deadline is rarely effective; you’re asking for their money-- they can ignore this.   Marginally better is a deadline with some actual basis in reality, like the fact that you’re about to head off to Israel for 3 weeks.  But my favorite is a deadline triggered by something that has the potential to a) suddenly generate a lot of investor interest; b) ramp up the startup’s valuation; or c) all of the above.

As an example, one of my startups is participating in Dave McClure’s 500Startups accelerator program.  At the end of the program a few months from now is Demo Day, which will bring startups and investors together for pitches and meet-n-greets.  We know there will be a ton of frenzied press and buzz leading up to this event, and we know our startup is well positioned vis-a-vis the other startups demo-ing.

Thus, we are using this event as a catalyst to help close a near-term convertible note.  Investor psychology is always driven by fear and greed; so at the same time we are overtly selling investors on the opportunity (greed), we are also subtly signaling the possibility of missing out on the deal when it heats up at Demo Day (fear).  It’s amazing how fast investors can move when motivated in this manner.

I hope this list provides a few good pointers for making the most of AngelList.  AngelList is a true a gem of a resource for startups seeking capital, and Naval and Nivi do a fantastic job of measuring, tracking, tweaking, and all around improving the site on a near real-time basis (seriously, it blows me away-- every time I check in there are new features).  Start playing around with it and get to know it.

Is your startup on AngelList?  Have you raised money?  If so, I look forward to hearing what has worked well for you (and what hasn't)-- please email me at nathan (at) venturearchetypes (com)  or you can follow me on Twitter @startupventures.


  1. Thanks for the good tips. I posted my startup a couple of weeks ago, but it has no followers. Any specific tips on how I need to round out my profile to get some attention? http://angel.co/shoutfast

  2. Thanks for an awesome post Nathan. A couple more suggestions:

    - I guarantee you don't need a lead investor to do well on AngelList. You just need to do well in any one of traction, product, social proof (e.g. a lead investor), or your team.

    - It is never to early to start a profile. Just indicate you're not raising money yet.

    Thanks again, we're going to tweet about this.

  3. @James-- I took a quick look at your AL profile-- it is pretty bare. Your founder blurbs are good but see Tip #-- you need screen shots, traction metrics (obviously, would need to build traction first) and the social proof elements (most of which takes legwork and offline hustle)

    @Nivi-- thanks for the note! Good points. I appended Point #1 with Naval's comments and stats on the % of deals that raised $ without an existing lead. But another interesting datapoint would be the % that DID have a lead going in that successfully raised $$? (in other words, it would still be interesting to see what sort of "boost" having an investor gives the startup...)

    Thanks guys, appreciate the discussion Nathan

  4. By the numbers in this article... only 5% of startups listed will get any funding. Pretty slim chance, ain't it?

  5. That's because 95% of those posted are too early or unfundable. They're concepts, or service businesses, too early, or in locations where angels don't invest. Most of the quality incubators accept 1%-3% of applicants. 5% is high by industry standards.

  6. Nathan. Great post, and thanks for the shout out.

    Also, to clarify a bit. Zerply was part of our experiment in incubation called The Co-op. Meeting them at H&F last fall was one of the reasons that we started The Co-op. We had to do something to help amazing companies like Zerply get funded and connect to investors.

    I don't recommend startups to Angel List unless they've gone through Angel Office Hours, and they've been asked to join The Co-op. Sorry.

    That being said, applications for our next batch are going to start soon. We'll be sending out a notification to our members via our Meetup mailing list in a week or two. And, we'll be posting more info on our blog in a couple of days: http://hackersandfounders.posterous.com/

  7. "- It is never to early to start a profile. Just indicate you're not raising money yet."

    So only profiles that indicate they're raising money get broadcast?

  8. Jonathan-- based on the feedback I've heard from the Zerply guys, H&F is a great program and a great "express on-ramp" to AL. How many startups per month/quarter/session do you take into the Co-op?

  9. Here's one more "hack" from a colleague, Cooper Marcus, who is founder of a startup called Wishery. Thanks, Cooper.

    "Nathan, Here is one more: Update your startup's Status Message every Thursday.

    You mentioned just updating your profile in general, but specifically updating this status message is better - as you said, it shows up in user's feeds, then can like/comment on it, and it has a very prominent place on your profile page.

    Updates on Thu are best because a weekly email gets sent to investors on Friday - and if you update on Thu, you can report your latest (and hopefully greatest!) news. This email will include the content of your status message - I think that other profile updates don't include the updated content, only a message that "startup XYZ updated their profile".

    What do you think? I've been using this technique to good effect!

    Cheers, Cooper"

  10. GREAT post! Very helpful - thanks.

    What if you're REALLY strong in several of those categories? We have a killer team, a product with outstanding design, and social proof to die for. Are you saying spend more of the limited space to highlight one and neglect the other two?

  11. @David-- thanks for the kind words. Plenty of space on the AngelList form for you to brag about your team, design and social proof until the cows come home!

  12. Nathan, Very good article. We are still not on Angellist but given what I am reading and understanding from fellow entrepreneurs we are seriously considering using AL. It seems to have become a indispensable tool for startups like ours. Kudos to Naval and Nivi for this success and value add to the community. Also your comments were spot on and honest - Counter arguments from AL team help as well.


  13. Nathan,

    Really great advice!!! Thanks for taking the time to put this together! It was instrumental in creating and fine-tuning (many times over) our profile.

    Best Regards,
    Rob Phillips

  14. I got here from the angel.co page /intro under tips... should have been "SUPER TIPS"
    Maybe it is too late in the life of this thread to ask but are there special style-notes for the non-software folks like me? I know hardware is a harder sale (scaling issues etc) - so what can I do to make the value easier and faster to see?

  15. These are all excellent suggestions which are thankfully received. I have come to appreciate the vital assistance obtained from posts like this I was able to discover in the far reaches of the internet.

    What suggestions would experienced founders and/or investors have for start-up companies which are unable to create a product without an outside investment due to the high costs of market entry? Are wire diagrams and PowerPoint slides good enough? I can't seem to get that initial introduction and I feel it has something to do with the lack of a tangible product.

  16. Great article Nathan. And a big thank you goes out to Nivi and Naval at AngelList. Excellent service, and I just posted my startup last week so we'll see what happens. I've learned a few good tips from this article so thank you for sharing.

    Lee Redwood

  17. Holy hell isn't this great or what?! Thank you so much for sharing this massive treasure chest of awesomeness. :)

    Now I have no excuses left - I'm going to have to go and have a serious look at our profile... And getting our previous investors & clients in line for social proof.


    CEO & Co-Founder

  18. Really great advice Nathan! Angellist has been a wonderful resource for many entrepreneurs that can really not only get you funding, but also provide you with some great connections and even friendships! One of the things I like most about AngelList is that it notifies people about the startups they follow whenever there is a change.


  19. While this article has a few months on it now, I am still finding these tips to be quite valuable. Thanks for putting it together and thanks for all the valuable commenters as well.

  20. This was really helpful! Do you have any insight as the best day of the week to go live with a profile?

    1. Hi Lindsay, I really don't...but would likely avoid Friday (dead zone) and perhaps Monday (everyone is slammed). Tues - Thurs is probably safest bet.

  21. Sorry if I am duplicating my original question... where do you find the "social proof" section?

    1. "Social proof" isn't a section but rather, it's the sum of who's involved in your startup (team, investors and advisors) + to a lessor extent, how many followers you have...

  22. I am getting ready to build out and seek early investments for https://angel.co/feedster-1 - Thank you for the tips.

    Do you think a kickstarter while doing Angellist is wise? We are wanting to gain the attention of multiple audiences to really get early adopters (our investors should want to use our new product as well).

    1. Typically, a startup is relevant either for AngelList or Kickstarter but not both at the same time. In my opinion you're currently too early to gain the interest of angel investors on AngelList.

  23. Thanks for the fast response!

    So launching the first edition and contest - using that social proof would make us better timing wise. (Correct or Incorrect?)

    AL - Should we continue to build the profile or close it and start a new when ready? (Should we keep our AL open and ready and updated or just can it and reopen later when more optimal - this based on assumption of first question being correct)

    1. Correct to the first question. You need more "meat" there before being relevant or interesting to AL investors. As to your second q, you can keep the profile open and add to it, but don't go live with the online fundraising portion until there's some real momentum.