Every week, I get about 2-3 emails from entrepreneurs asking me to introduce them to angel investors who might be interested in a startup.
Besides this, I get about 3-5 introduction requests to specific investors.
Looking at my reports from Conspire, I end up helping more than 70% of the specific requests and only introduce 25% of the folks from the generic requests to “connect” to investors.
I’d love to help a lot more, but I unfortunately dont have the time. For the entrepreneurs who want connections, I end up saying – Can you please check on #angelList. Which is what I would do if I were in their position.
I usually get a note from the entrepreneur who say most of the investors on Angel List are “fake”. I think they are confusing getting “lead investors”, who are on Angel List versus, getting the entire round done, with investors who are not on Angel List.
Somehow, many of them come back telling me that there are a host of “other investors” who are actively investing, but are not on angel List.
That lead me to the topic of this blog post.
“What percent of active angel investors are on #AngelList?”
Most entrepreneurs believe that like the iceberg featured above there are a lot more actual investors than the # on any database. Or that there is opacity in the identification of angel investors.
I am not sure of the data, but I wanted to do some quick and dirty data checking.
Here are the assumptions I am making about the startup.
1. I assumed that I was looking to raise money in Bangalore, India or Mountain View, California.
2. I am starting a company in the SaaS (Software as a Service) space.
3. I am looking to raise $500K from angel investors
4. I have early product and some customers (none of them are paying, or a few are paying too little).
5. I dont have a large network of investors and I am not from Facebook, Google, LinkedIn or a “hot company” on my resume.
I then looked at Angel List with these assumptions and got about 35 “individual investors” in India and 512 investors in Silicon Valley. There are actually a lot more, but I weeded out the ones who have done only 1 investment over 2 years ago and those that are not SaaS specialists.
I also then looked at the recent 9 SaaS investments (last 2 years) in India, and 14 SaaS investments in SaaS in the Bay area. I got this list from Owler and Crunchbase and also looked at data from 5 accelerators – YC, 500, Alchemist, Angel Pad and StartX. I wanted to check who are the investors in these startups.
The data on some of the investors is available but most of the startups that recently got funded have 3-5 investors who are public and rest (similar number) who are “behind the scenes”.
The quick and dirty research suggests that close to 40%-50% of angel investors are not on Angel List.
The reason I was able to determine that only 20%-50% of the investors were publicly identifiable was by speaking to 7 of the Indian startups and 9 of the US ones.
The most common 3 reasons why not all investors were listed on the company’s Angel List page were:
1. The angel investor was not on Angel List.
2. The other angel investors did not want to be identified or preferred to keep a low profile.
3. The angel investors were part of the syndicate, which was led by one of the well identified investors already on Angel List.
I spoke to 5 of the “lead investors” and 3 of the “not on Angel List” as well.
There are 3 takeaways for entrepreneurs from my research.
1. To get an angel round done, you need a lead angel investor who is very likely on Angel List and is pretty active (you need a lead for other rounds as well, BTW, so no surprises here).
2. If an “angel investor” is not on Angel List, it is highly unlikely they will lead the round or help you close the round.
3. Most of the “other investors”, not on Angel List purely work on recommendations from their trusted “Angel investors” NOT from other entrepreneurs. This is different from professional investors (such as Micro VC’s or VC’s) who get most of their recommendations from other entrepreneurs.
So, my recommendation is start on Angel List, get your lead investor and then use other sources (LinkedIn is the better source than Angel List for this) to find investors who are connected to your lead on that platform, but are not on Angel List. Also use recommendations from your lead investor to help you get to other investors who invest with your lead.