You need seed money, but one investor writing the whole check is hard to find. An angel group gathers individual angels around a regular process for hearing startup pitches. Usually, the members remain independent: the group supplies the room, schedule, and shared conversation, while each angel decides whether to invest. That means an introduction to a group is not one fundraising decision—it can become many separate investor conversations. section 5.2 section 5.3
Some groups take a more organized route. Members invest into a shared fund, and the group follows a process to decide whether that fund will invest. A paid fund manager or managing director may handle the fund and its disbursements. For a startup, this can put one fund name on the cap table rather than many individual angels, although the underlying money still comes from individual members. section 5.2 section 10.2
Prepare for a crowded pitch room
After researching groups and applying, expect screening before a formal pitch session: a group may hear only three to ten prospects in one meeting. You may face 20, 30, or 40 angels, in person or on a controlled Zoom session. Research who fills each group and tailor part of the story accordingly; a finance-heavy group and a technology-heavy group may respond to different emphasis. section 6.5
A practical way to approach an angel group:
- Treat every member as a potential separate decision-maker when the group is an informal affiliation. section 5.2
- Budget time for follow-up: raising money through a group requires getting individual members comfortable investing. section 5.3
- Show how an investment could produce a substantial return, supported by customer economics, projected revenue, potential acquirers, and comparable sale prices. section 6.5
- Ask whether the group invests through a fund, since that changes who appears on the cap table and who represents the investment. section 10.2
Table 5.1 The who, what, and when of the various stages of venture capital financing rounds
|
Round
|
Pre-seed
|
Seed
|
Series A
|
Series B
|
Series C
|
|---|---|---|---|---|---|
|
Form
|
Cash or debt
|
Equity
|
Preferred “A” equity
|
Preferred “B” equity
|
Preferred “C” equity
|
|
Who
|
Founders Friends and family
|
Venture capitalists Angels
|
Venture capitalists Corporate
|
Venture capitalists Private equity Corporate
|
Private equity Corporate
|
|
What
|
Early working capital to get to first financing
|
First formal financing round after formation from investors focused on early-stage investing
|
First significant financing round in which one or more VCs become involved in a company previously financed by founders, seed VCs, and/or angels
|
Scaling round when the company has proven it is able to grow fast
|
Management and investors are contemplating an exit and need to prepare and raise the value of the company in preparation.
|
|
When
|
Immediately upon formation
|
When they agree with and buy into your “story” of opportunity
|
Once proof of product-market fit is shown (typically three paying customers)
|
When sales and marketing are what is needed to grow
|
When the company is contemplating an exit
|
|
Size
|
$100,000 to $750,000
|
$1 million to $2 million
|
$2 million to $10 million
|
$10 million to $25 million
|
$25 million and up
|
Compare angel participation with pre-seed, seed, and later financing rounds to place an angel group in the broader fundraising sequence. section 5.2
The catch is simple: angel groups can raise meaningful amounts, but they are not miniature venture firms with the same evaluation resources. Use the group for access and structured pitching, then do the work of earning confidence from the people behind it. section 5.2 section 5.3
