Our angel deal
Well we're done raising money (for now). We started pitching in late May, ramped the meetings up from mid June to late July, closed $700K Aug 15th and allowed 30 days for others to get their money in – which means Thursday it's done – total raise $1M. So I'd say 4 months – 5 if you figure all the prep work. I figure we had a 65% hit ratio from pitch to invest, but we raised money in small chunks of $25K so I imagine the decision was easy for some. We had plenty of money to work through the process so we didn't feel the pressure of running out of cash; I bet that actually works against you in closing a round since you become so focused on day "zero dollar". This was my first pure angel deal and surprisingly it was a lot harder than I expected. Angels, for the most part, don't do this for a living so getting back to you in a timely manner with a "yes" or a "no" is not on the top of their list. A VC – it's their business to make investment decisions so you can predict their behavior. VCs typically come in for what they promise, angels sometimes don't. We probably gave 50 pitches – we gave less to raise $100M at Raindance. The timing was about the same – 4 months. The one great thing about this round is we did most of it without leaving downtown Boulder or driving in a car! Where else can you do that? Boulder has an awesome network of angel investors and many of them are my friends – nothing like pitching your idea to a friend and getting a thumbs up to make your day – and after a few thumbs down you learn to not take it personally. In a VC deal you pitch and pitch until you get a term sheet, then you use that term sheet to coral other firms into the mix. In an angel deal there typically is no lead – so you create your own term sheet and say why you think it's fair. The term sheet in an angel deal is simply a way to describe the economics; in a VC deal it becomes a rallying point to drive momentum. Angel deals do not have a built in mechanism to drive to a close; so as a pitch artist you have to just pick a date and say, "We close on Aug 15th." If you slip the date or make it soft I imagine you can lose momentum – we were prepared as founders to make up any shortfall on that date to make the close happen (fortunately we didn't have to come up with any extra cash). Once we closed the $700K the wind was at our back – the last $300K was much easier than the first $700K; people knew of the deal, talked about it and so we just followed up with a handful investors and it came together. We debated allowing a longer period from first close to last dollar but I liked the forced momentum; it allows management to be done with financing. And that we are – now we just need to spend it and make more of it.
