Howard Greenstein from Inc. recently interviewed Naval and me for a post called 5 Questions for an Angel Investor:

Howard Greenstein: How does a start-up know when it is ready for Angel funding?

Venture Hacks: If you’ve just got an idea, check out incubators like Y Combinator and TechStars. Or you might be able to convince someone who knows you well (a former boss or family member) to invest. Or you might be able to convince someone who knows the market really well  (they’ve had the same idea as you) to invest if they believe in the team.

If you’ve got amazing pedigree and connections (your last company was acquired and the investors made money) you might be able to raise money on just that alone. If investors are clamoring to invest before you start raising money, you can take this route, otherwise, you can’t.

Otherwise, build something (anything), put it in the hands of customers and get some traction before raising money. Any hardware/software/whatever startup can do this thanks to lean startup and customer development techniques and the decreasing costs of doing *everything* — the exception is startups with predominantly technical risk. Also get some social proof (brand name advisors) before contacting angels. Social proof lubricates getting in the door.

Read the rest of the interview for our answers to 4 more questions, including our thoughts on what to look for in an angel and trade-offs between raising money vs. boot-strapping. I think the interview turned out well. Thanks for pulling it together Howard.

Topics Angels · Interview