Three early-stage investors spoke with the Greentown Labs community this month about different types of investors, how to build investor relationships, and advice for approaching fundraising in an uncertain economy.
The panel, which was part of Greentown’s Investor Speaker Series, featured Deb Kemper, managing partner of Golden Seeds Ventures, Christopher Mirabile, chair emeritus and public policy chair emeritus of the Angel Capital Association, and Ziad H. Moukheiber, president and CEO of Boston Harbor Angels.
Here are top takeaways from the panel:
WHAT ARE THE DIFFERENCES BETWEEN ANGEL INVESTORS AND VENTURE CAPITALISTS (VCS)?
While there are many similarities between angels and VCs, there are important structural differences, Mirabile explained.
“Angels are individual people investing their own money, and venture capitalists are money managers investing other people’s money, and they’re doing it under a fund structure that has a timeline for when they’re going to return that capital,” he said.
If you’re looking to an angel for investment, you need to sell one person on your company rather than a multi-person investment committee. Angels also tend to invest in earlier-stage companies than VCs, the panelists said.
WHAT SHOULD STARTUPS WHO ARE SEEKING INVESTMENTS CONSIDER DURING THIS TIME?
Mirabile said investments will “definitely continue” and that given investors’ lengthy holding periods, the current economic downturn is relatively insignificant to them in the long run.
He said startups should know, however, that investors are focused on helping their current portfolios. Combined with the difficulties of not being able to meet in person and investors’ heightened sense of risk, this means that investments will be slower during this period.
Given this challenging investment landscape, it’s more important than ever to have “all your ducks in a row,” Kemper said—make sure you have a good pitch deck and data to back you up. Moukheiber recommended researching an investor on LinkedIn before reaching out and personalizing your email so it’s clear the message is just to them, rather than something you’re sending to a whole list of investors.
Mirabile noted that “the power of a warm introduction has never been greater” than it is now—if a startup manages to get a mutual contact to introduce them, it shows Mirabile that they have many of the people skills it would take to navigate relationships with customers, he explained.
Despite the current crisis, the panelists expressed optimism for the future.
“I’ve never been so excited to help entrepreneurs who want to make a difference,” Moukheiber told the Greentown community.
“I still think cleantech is the wave of the future,” Kemper said. “There’s going to be some bumps in the road because of the oil price situation we’re in, but I don’t think the need for cleantech has gone away.”
The Investor Speaker Series is part of Greentown Labs’ commitment to support startups more than ever as they navigate the impacts of COVID-19. To learn more about these efforts, follow us on Twitter or check out our blog.