Kicking off the first-ever Venture Shift, hosted by Vator and Bullpen Capital at the Cafe du Nord in San Francisco, was a panel of investors of all shapes and sizes discussing the changing VC landscape in the face of a growing number of angels and micro-cap VC funds.
On the super angel side is Jeff Clavier from SoftTech VC, pictured below at far left. To the right of him, in order, are Geoff Ralston from Imagine K12 (self-described "mediocre investor"), Mike Levit from Founder's Den and Neal Hansch from Rustic Canyon. On far left is Ezra Roizen from Ackrell Capital, moderating.
The best part? Ralston's recipe for getting an angel investor to open your email pitch. Read on below.
For the love of the game
"Typically, all of us are entrepreneurs," admitted Clavier. "Having done it before, having been on the other side of the table, we're much more aligned with the entrepreneur than other investors. We understand what they go through.”
Levit agreed, calling Founder's Den a "labor of love." At the Den, relationships grow organically: whether through occasional lunches or meetings between founders, entrepreneurs can get from their community whatever they would get from angels.
Ralston kept the agreement train going, saying that the reason to become an angel investor is for the love of it. In tune with Clavier's statement, he said, "we tend to be entrepreneurs, we have resonance with them, we understand the kind of care and feeding they need."
Sitting on the sidelines, Hansch spoke of VCs as "some sort of professionalized angel." They want to get involved early, meet the team, watch growth and follow up small participation in Series A by leading Series B.
Are angels forcing VCs into the later-stage deals?
Reaching out in front of him and gripping some invisible edge, Hansch physically visualized how early-stage VCs try to hold on to the early-stage deals as long as possible. As he said just above, they try to stay friendly to the super angels, geting involved earlier on so they can lead later deals.
Is there a secret recipe for approaching angels?
"Yes," Ralston said flatly, "there is a secret."
But how does an entrepreneur get you to open the email?
Ralston wouldn't give away all the secrets, but he suggested three main things:
- "Sell yourself, sell your team: because almost all of us invest in people first. I have done many stupid deals because of the people. If they can look you in the eye and say 'we can make this successful,' then they are more likely to receive funding." At the same time, "there's a fine line between confidence and arrogance."
- Product. "Most of us are entrepreneurs," said Ralston. "Show me some cool stuff. Don’t come without a prototype. Send me a link. Let me play."
- The dream. Why is your product interesting or fun or going to change the world in some interesting way?4 - really the same formula
Same question, but what's the VC perspective?
VCs have the same three filters, Hansch assured the audience, with the added requirement that the applicant be a highly scalable business. To hammer home Ralston's first point, Hansch said it's like "location, location, location" in real estate: "team, team, team" is the mantra in fundraising.
Levit concurred, calling team "the most important thing." Unclear whether he was talking about himself or for angels, he said not being easy to find is a fliter so that those in the network can get through faster.
Are we moving out of world where it’s not just a hits business but more about modest outcomes?
Levit thinks it's still a hits business, but entrepreneurs are redefining what a "hit" is.
"Most angels are doing it for fun," argued Ralston. "I don’t need hits, I need to believe in it."