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Entrepreneurs: What you need to know about raising funds from Business Angels

I often give presentations to early-stage startups looking to raise funds from Business Angels (BAs). BAs will finance your first round, so you need to be prepared and know how to convince them to invest in you. How? I’ll explain everything!

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How to maximize your fundraising?

To maximize your fundraising, you need to know:

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1. How to find BAs:

This depends on whether you want to do direct outreach (on LinkedIn) or convince structured BA groups (lists available online).

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2. What BAs are looking for in terms of multiples:

This can vary significantly between casual and more professional BAs. I advise you to discuss this with your BA before bringing them onto your cap table.

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3. The average ticket size BAs are willing to invest:

Generally between €5k and €50k; I believe the average is around €15k. Don't focus solely on €50k tickets, or your fundraising might drag on...

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4. How long it takes to raise funds:

On average, 3 to 6 months depending on the project, which is the time needed to find enough BAs to close the round.

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5. How to set your valuation:

Based on the cash you need and the percentage of equity you are willing to give up (often between 10% and 20%)...

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6. When to start fundraising:

You need to identify when you will run out of cash and plan as far ahead as possible.

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7. The difference between a BSA round and an equity round:

A BSA (warrant) allows you to get the cash immediately without setting a valuation right now. It is less tax-efficient for BAs, as they cannot include the investment in a PEA or benefit from IR-PME tax reductions.

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8. The metrics to reach to interest VCs later on:

VCs are increasingly competing with BAs, sometimes with amounts ranging from €300k to €500k. They may get involved if they feel that product-market fit has been reached or is close (sometimes with a few tens of thousands in MRR, though a Series A usually requires at least €60k–€80k in MRR).

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9. Who to choose for your board of advisors:

I recommend choosing people who are experienced or well-regarded in your sector. This adds credibility to your fundraising, especially if the subject matter is highly technical.

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There are, of course, many other points to consider. Each of these could be explored in great detail. You should at least be familiar with these and be prepared before approaching your first angel investors. If you don't have all the answers, let's discuss it together :)

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