How Not to Approach Venture Capitalists and Angel Investors

To become more effective in your search for venture capital or angel capital, here are three rules to remember.

1. Investing is a local face-to-face game. There are two reasons for this. First, investors like to know who they are dealing with. This means that a series of in-person meetings usually has to take place before they start to warm up to the entrepreneur. Second, if something starts going wrong at a company, the investor wants to be able to drive to its office in under an hour for a meeting with the person in charge.

2. Venture capitalists and angel investors specialize by industries in which they have in-depth experience. Once you find a local investor do some further research through their website or with a telephone call to see if they invest in your type of project.

3. Both venture capital firms and angel investors have a preferred deal size. For some venture capital firms the minimum investment size may be $2 million and the maximum may be $5 million. Venture capital firms can also be broken down into early stage and later stage investors with the vast majority being in the latter group. This means they do not invest in startups. For angel investors the minimum may be $50,000 and the maximum may be $200,000. That is really important to find out before you send an executive summary.

In most cases, you can find the answers to all three questions on the venture capital firm's website. With a private investor you will have to ask him or people who know him before proceeding with your pitch.

From Anti-Venture Capital


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