Comments on: How to select your angel investors

By: 5 Mistakes That Kill Startups | Seeqnce Blog

5 Mistakes That Kill Startups | Seeqnce Blog — Wed, 29 Feb 2012 14:24:33 +0000

[...] Choosing investors based on wrong criteria: Many times entrepreneurs, especially the ones who can already feel the “hotness” of their [...]

By: Notes on raising seed financing | Entrepreneurial

Notes on raising seed financing | Entrepreneurial — Fri, 10 Jun 2011 17:03:25 +0000

[...] Industry experts can be really nice complements to tech investors (especially in b2b companies). (more) [...]

By: cdixon.org – chris dixon's blog / Notes on raising seed financing

cdixon.org – chris dixon's blog / Notes on raising seed financing — Thu, 09 Jun 2011 22:03:00 +0000

[...] Industry experts can be really nice complements to tech investors (especially in b2b companies). (more) [...]

By: Web Resources for Start-Ups « Connecticut Technology & Intellectual Property

Thu, 12 Nov 2009 20:36:32 +0000

[...] Chris Dixon blog: More great stuff from a person with experience in the industry….check out How to select your angel investors. [...]

By: Dean

Dean — Wed, 11 Nov 2009 01:03:52 +0000

I have a forestry and mining project in Southern Sudan that I am looking to procure financing for. Is this something that you can help with?

By: How to select your angel investors | Igniting Startups - nPost

How to select your angel investors | Igniting Startups - nPost — Tue, 10 Nov 2009 20:34:11 +0000

[...] From cdixon.org [...]

By: Dean

Dean — Tue, 10 Nov 2009 17:03:52 +0000

I have a forestry and mining project in Southern Sudan that I am looking to procure financing for. Is this something that you can help with?

By: The Ether and the Scrum

The Ether and the Scrum — Wed, 04 Nov 2009 13:20:35 +0000

[...] How to select your angel investors (cdixon.org) [...]

By: Mo Koyfman

Mo Koyfman — Wed, 04 Nov 2009 10:21:24 +0000

your disclaimer literally made me laugh out loud. nice post, as per usual…

By: Are celebrity investors/advisors/board members worth it? | Kentucky Startup Blog

Wed, 04 Nov 2009 00:57:48 +0000

[...] recently read two posts on this subject, one from Altos Ventures and one from Chris Dixon and I agree with the key theme that celebrity (the term that i would use is “big name” [...]

By: Tweets in Your Pocket and the Danger of Multitasking : Floriday Properties

Tweets in Your Pocket and the Danger of Multitasking : Floriday Properties — Tue, 03 Nov 2009 22:19:13 +0000

[...] to pick your angels. Hacker News flags a post by Chris Dixon on mistakes start-ups make when choosing their angel investors. He cautions against picking angels who are suggested by your lead investors and against picking [...]

By: chris dixon

chris dixon — Tue, 03 Nov 2009 21:09:10 +0000

I think good angels vary in what they do as I alluded to in the post. Ron Conway is a connector. You send him a list of companies and he can introduce you to an incredible number of the right people at those companies. Other angels give advice, particularly around financing events and hiring. Other angels (celebrities) add some buzz. Don't expect a ton of time from any of the angels or even from the VCs for that matter. Number one thing to look for is timely advice and introductions.

By: jaredhecht

jaredhecht — Tue, 03 Nov 2009 19:31:57 +0000

Would like to hear your take on the role of angel investors. I heard Ron Conway say that he thinks board meetings are useless. He can be just as effective on a 15 minute phone call.

It seems to me that angel investing is more of a gaming/hedge-fund type approach. It's difficult to be so hands-on when you have hundreds of investments – so you play the odds and help out/facilitate when you can. In selecting angel investors, shouldn't one keep this in mind?

By: reecepacheco

reecepacheco — Tue, 03 Nov 2009 18:55:13 +0000

Ahh… Thanks Chris. Great suggestion at the end.

By: reecepacheco

reecepacheco — Tue, 03 Nov 2009 16:55:47 +0000

'Dumb money' seems cool in theory, but what you need are investors who will help you grow your business and create value one way or another.

By: chris dixon

chris dixon — Tue, 03 Nov 2009 16:03:51 +0000

actually blogged about it here http://www.cdixon.org/?p=252

By: chris dixon

chris dixon — Tue, 03 Nov 2009 16:02:47 +0000

1 believe it or not to some people that is a “lottery ticket” – not meaningful money
2 they are “free riding” – they know other investors will do the work
3 their celebrity is such that free riding won't affect their reputation

By: Philip

Philip — Tue, 03 Nov 2009 15:44:17 +0000

I would say you are a celebrity

By: Ryan Graves

Ryan Graves — Tue, 03 Nov 2009 14:17:57 +0000

Without sounding like a kiss ass, I believe your rep power, or celebrity, is growing…

post like this are driving that. Nice job Chris.

By: rokhayakebe

rokhayakebe — Tue, 03 Nov 2009 14:06:04 +0000

Question.

-Why would someone invest 100k-250k and not respond emails, or follow up somehow?

Something is not right here.

By: dbv

dbv — Tue, 03 Nov 2009 13:55:34 +0000

There is also the case where the entrepreneur really wants 'dumb money' so that they can be left alone but I guess that is just wishful thinking!

By: reecepacheco

reecepacheco — Tue, 03 Nov 2009 13:06:02 +0000

We took some family/friends cash as a convertible note early on to get started. It was quick and everyone's on the same page.

However, I know some angels hate it. Chris, what's your opinion on convertible notes, both as an entrepreneur and as an angel? (Maybe worth covering in another post).

By: fpeyre

fpeyre — Tue, 03 Nov 2009 12:34:57 +0000

Last point here: the best way if you still want to get some money from your friends and family is to take it on a convertible debt basis. That debt will convert whenever you'll raise your first round at the value agreed on with the VC. The good news is that you don't shoot yourself in the foot by assessing a value that nobody will follow on (just to please your family… or yourself…) and everyone's happy.

By: doke01

doke01 — Tue, 03 Nov 2009 11:49:47 +0000

You're a superstar, you know you are! heh:)

By: fpeyre

fpeyre — Tue, 03 Nov 2009 11:40:20 +0000

I'll also add that one of the vicious effect of the friends and family is that whenever you're assessing your valuation for your own business, you'll always end up higher than the market. And your grandma is not going to contradict you (she loves you too much for that…). So you end up with some money at a too high valuation that makes subsequent rounds (especially when you start bringing professional money) a nightmare…

By: davidblerner

davidblerner — Tue, 03 Nov 2009 11:21:53 +0000

Agree entirely. In my experience, the higher the profile, the less engaged the investor. I like the “varied model”… mixing it up works so long as there are no outrageously massive egos on the celeb side.

By: Shaun Abrahamson

Shaun Abrahamson — Tue, 03 Nov 2009 11:04:52 +0000

Excellent points. It's hard to turn down the celeb and the bragging rights that come with “so-and-so” is on this deal. The brand association lifts the whole endeavor.

However, I like to think of it a little like twitter followers – if someone has a huge number of followers and follows a huge number of people, they have less time to focus on you. As you point out there are always exceptions and there are people who seem to create more than 24hrs in a day.

But if people have a smaller number of people they are following, it seems more likely you can get on the radar. Most startups need their investors to act like specialty players on their team to help with hiring, product dev decisions, etc and you cant get this from someone who already has too many other things to do.

By: OurShelf

OurShelf — Tue, 03 Nov 2009 11:00:38 +0000

This was an excellent point. I've recently been working through a very similar situation and would say the general approach here is pretty close to spot on. With regards to the celebrities, I think it's also important to see what they're famous for. For example, I think Ron Conway is famous for the eye he has for ideas and visions, the dedication he gives to his investments, and his commitment to his role in the startup ecosystem.

By: chris dixon

chris dixon — Tue, 03 Nov 2009 10:47:22 +0000

Oh yeah, I took that for granted but should have mentioned it. Actually if possible, I'd avoid family / friends who don't do professional “VC style” investing for multiple reasons. Besides their lack of value add, they are very often not really prepared to lose all the money they invested (even if they think they are), which is very frequent in this type of investing.

If you want your parents/family/friends to own shares in your startup, donate some of your own shares, don't let them invest.

By: fpeyre

fpeyre — Tue, 03 Nov 2009 10:43:55 +0000

Excellent point Chris. I would throw in that you still want to go for “smart money” as opposed to pushing your uncle's friend who's a retired banker to put some money down since it'll be less headaches down the road (especially if the company is not as successful as you initially thought) and you'll probably get more help with professionals. Just beware that they'll be obviously less available than your uncle's friend and make sure you bring them on issues that are key for you rather than the day to day.