Our Spring Networking: Financing for Startups was an great experience, Idas Levato from angel investors was an amazing speaker and thought us a lot about how to approach an investor for funding. here are a few tips from our event last week:

Top 10 Take Away For Early Stage Founders from Idas Levato of Angel Investors Ontario June 2019

1) Find The Right Community (Avoid the time wasting shiny fluffy stuff unless there is a speaker you need to meet)

a. Support

b. Resources

c. Network

2) Treat your Time Like It’s Money. Remember this when meeting with mentors, investors, influencers and potential partners.

a. For EVERY MEETING have 3 specific goals.

b. Take one wildcard meeting a week IF you can. Serendipity can surprise you.

3) Study HOW to pitch, THEN learn and BUILD your pitch and attune it to your audience. Read your audience for reaction. Know that it’s an art form that some founders hire an expert to pitch for them.

Look up Frank Erschen https://www.angelinvestorsontario.ca/resources/for-entrepreneurs Kevin Smith https://thestoryarchitect.com/blog/

a. Elevator Pitch – No more than 10 words. Seriously. Seven (yes 7) second attention span is all you get.

b. Intro Pitch- 3 minutes or less (Start with why, make it personal, make it relevant)

c. Investor Pitch 5-8 Minutes. Just the facts/details. Your deck should not be longer than 10 slides for the essential pitch google Guy Kawasaki’s template: https://guykawasaki.com/the-only-10slides-you-need-in-your-pitch/ KNOW YOUR NUMBERS inside and out.

4) Networks Are Everything: Biggest Mistake: Not Earning Trust.

Investors, mentors, advisors and influences will ignore you or worse, blacklist annoying and aggressive people imposing on them.

i. Research them. Have something personal and relevant to say to them when you ask to meet. Have real purpose for why you are reaching out to them on LinkedIN or in Person. NEVER Blind/Cold Connect on socials or linkedIn.

ii. Offer to help them or something they are passionate about them. Always deliver. Don’t offer what you can’t deliver on. Be super accountable.

iii. Google their interviews and podcasts. Especially podcasts and learning what you might have in COMMON. Being relatable and relevant is really fundamental for busy people.

iv. Make it easy for people to introduce you. Remember gratitude. They are doing you the favour. SO ALWAYS make it easy for them. Draft the introduction paragraph from their Point of View. Keep it brief and HONEST.

Always remember to thank whoever connects or helps you and offer to help or pay it forward. b. From the reception to social media manager, how you treat them will reflect upon you and the Toronto Startup ecosystem is SMALL and hyper-connected.

5) The Relationship-First Rule

Angels expect you to have done some due diligence and research when it comes to them--at least finding basic information about their background, why they invest, what they're looking for, their previous investments, and value they can add beyond cash. Many angels have websites and some blog.. If founders haven't done the basic homework before calling me or an investor, you will been judged just as lazy or worse, thoughtless when it comes to calling prospects or customers.

6) How do you know you are ready to present or pitch? How do You get in front of investors a. Understand if you are ready to approach investors:

Take our Investment Ready Quiz on our site: https://www.angelinvestorsontario.ca/entrepreneurship/investment-ready-quiz i. You should be ready to answer all those questions if not get help from an advisor and build your responses. The question summary of 65 typical investor-ready questions are included in the end of this document.

b. How do you get invited to pitch or meet investors? How do the angel groups work

i. Pitch Events- Fundica, MARS, RYERSON, UofT, Collision Conference, Elevate Conference …. So many opportunities IF you are ready

ii. OPN People Network Jeffrey Potvin https://opn.ninja/

iii. Angel Investors Ontario: Virtual Joint Screenings by Theme happen 3 time a year WEB EX GUST Portal (Also each angel group has it.) Group Managers pre-screen candidates and select a 3-5 startups to appear at their monthly investment meeting. MLA 48 gives you a reply in 48 hours. Deal Sharing call monthly with all the managers of the angel groups. Don’t lie or exaggerate on your pitch applications. You will be expected to provide proof and losing credibility to inflation traction information or market opportunity will cause you to lose credibility. You should know that it will surface very quickly, during the pitch Q&A or in the first due diligence meeting.

De-Risking: Investors will expect you to have proof of

• Team

• Measured traction (purchase orders, signed partnerships, pre-orders)

• Accelerator/Incubator experience.

Some founders attend 2-3 accelerators/incubators/bootcamps. Some go to the US for additional access to investors. It shows commitment and initiative.

7) The angel sweet spot is $150,000 to $1.5 million. And investing is ALWAYS personal.

David S. Rose, founder of the New York Angels, broke out where entrepreneurs typically look for given amounts of money: (List and reference sourced here: https://www.inc.com/erik-sherman/5-things-you-must-know-about-angelinvestors.html )

• Up to $25,000, the choice is usually self-funding. If you don't have that much money in, many others will be uneasy about taking part.

• From $25,000 to $150,000, you're looking at friends and family, offering either common stock or convertible notes.

• The angel sweet spot is between $150,000 and $1.5 million, more often raised from a number of individuals but sometimes from a single generous and well-off person. Why particularly well-off? Go back to how often these investments fall flat.

• In the $1.5 million to $10 million range, you're in early-stage venture capital in at least two phases, with half of the money up front and the rest paid in phases. More than this, and it's a late-stage venture fund.

Working with angels may make sense at a particular early stage of business growth. Going to them too early or too late will minimize your chances of getting interest.

8) Know Who You Are Marrying: Beware of investors with a bad reputation: taking their money will be nothing but grief or worse, will ruin your startup.

Don’t be rushed into signing. a. Heavily consider if you really NEED the money or WANT it. (Start VS Growth). b. Early dilution steals the balance of power of a founder to control the culture and direction of their company. You will have to make decisions best for investors not necessarily best for you or your coworkers or original founder vision.

9) The Smartest Founders Find Non-Dilutive Grants BEFORE asking for investors who dilute their equity AND fund raising is a huge time use for early stage founders.

a. It’s a VERY common first time founder mistake to spend too much time chasing investors where time is better spent building network and finding product-market fit (customers and exit/acquisition strategy).

b. Investors can tell when you make rookie mistakes like pitching too early.

10) Contracts

a. Really know the templates that angel investors use and educate yourself and get objective expert advice by a mentor on the contracts long before you ask for investments

b. Visit the National Angel Capital Site for resources : https://www.nacocanada.com/cpages/entrepreneurresources

c. Learn what Pre-Money Valuation is and how to calculate it.

d. Have a good lawyer you trust.

e. If you want to get inside the head of your investor you might want to follow Peter Cowley

i. https://www.investedinvestor.com/book

ii. Great First Time Founder Advice : https://medium.com/@mikeknapp/11-tips-for-first-time-founders-833165168660