MATT MALONEY: Regardless of the stage of your startup — raising angel funds, starting to pitch VCs or closing out a Series C — I preach the same mantra: Seek “smart” money.
While taking outside capital is often necessary, remember that an investor’s experience and expertise is just as, if not more valuable than their money. In the case of GrubHub, we found the ideal local angel in Chuck Templeton, the founder of OpenTable. Chuck knows the restaurant industry like the back of his hand and proved to be an invaluable resource as we continued to grow.
Angel investors come into play relatively early in the life of a startup and can have an enormous impact on the future of the company. Here are my top three tips for finding the right angel for your company:
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Go local. The right angel can be a critical asset to your company, so make sure they are accessible. Better yet, find one in your backyard like we did with Chuck. Between 2006 and 2009, I would estimate that Chuck spent 10 to 20 hours a week working hand-in-hand with our team.
Find someone with the right experience. An investor with industry expertise can help an entrepreneur identify market-specific obstacles before they become roadblocks. Bonus points if the same angel has successfully navigated a few funding rounds or an exit. These are lessons and skills that only come from experience.
Network effect. The size and quality of a network has a direct impact on sourcing employee talent and building out a business development pipeline. The ideal angel should exponentially grow your existing network, saving you the time and effort needed to make quality contacts.
(Read more from startup mentor Matt Maloney.)
(Read about startup mentor Matt Maloney.)