Before Raising an Angel Round

Lately, it feels like a number of entrepreneurs I know that are in the low six figures recurring revenue range are contemplating raising money either through an angel round or a micro VC round. Each one has already raised a friends and family round, is near product-market fit or already has it, and has a low burn rate. Now, there’s a desire to grow faster, and raising an angel round is a common next thought.

Here are a few questions to think through before raising an angel round:

  • How close is the product to initial product-market fit? How do you know?
  • How repeatable is the customer acquisition process? When will you feel confident that it’s repeatable?
  • What does the spreadsheet math say about growing without more outside capital vs raising an angel round (e.g. growth rates, co-founder dilution, etc)?
  • What are the expectations for ongoing investor involvement (e.g. hands-on, passive, non-existent, etc.)?
  • What milestones will be achieved with the new money?

Entrepreneurs would do well to think through these topics before setting out to raise an angel round. While raising an angel round isn’t as involved as raising a venture round, it still takes significant time and effort.

What else? What are some other questions to think through before raising an angel round?

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