How to Secure Angel Funding When a Recession Hits

Mega funds are still closing new rounds, and smaller VCs are still deploying capital. But is the angel community still active? Christopher Mirable shared his inside view on how the current downturn has affected angel investors and how founders can optimize their fundraising strategy at the seed stage to successfully close a round in the midst of a recession.

MORE ABOUT CHRISTOPHER

Christopher Mirabile is the Chair Emeritus and Public Policy Chair of the Angel Capital Association and the co-founder of portfolio management tool www.seraf-investor.com. He is also co-Managing Director of Launchpad Venture Group, a venture investment group focused on seed and early-stage investments in technology-oriented companies. Launchpad is the largest angel group in New England and top-three ranked group in the U.S. As a full-time angel investor and an active member of the Boston-area angel investing community, Christopher has personally made more than 65 investments in start-up companies. He was named one of the “Top Angel Investors in New England” by Xconomy.

KEY TAKEAWAYS

  • When networking, always remember the “three golden questions”: Can I get advice from you? Can you think of any I could talk to about this? Can you introduce me to that person?
  • Funding lifecycles will take longer than usual. If you plan to raise in 6 months, start the process now.
  • May and June 2020 are expected to be lighter on the angel funding side. The summer is usually a slower period so expect the cycle to pick back up in the fall.
  • In many ways, it’s actually easier to secure a meeting with an investor right now. Video calls have less friction than meeting in person. Investors are spending as much time commuting to and from home and various meetings.
  • Investors will likely prioritize follow-on rounds for investments over new investments given the choice. Protecting their previous investments is a top priority.
  • In order to relieve your cash burn, think about your need-to-haves versus your nice-to-haves.
  • Building consensus is trickier right now. Not being able to meet entrepreneurs in person has definitely changed the landscape and expect a longer fundraising time period because of this.
  • Angel investors generally recognize that investing through economic dips can have the best returns in the long run.
  • Angels are active right now but keep in mind that net wealth is down on the angel side so the asset class is perceived to be riskier during times like these.

Thank you Christopher for taking time out of your day to share your expertise with the greater Venture Lane community!

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