The Metrics of Fundraising from Business Angels

Posted by Pierre de la Fortune on April 11, 2015 @ 12:01 a.m.

Written by Aristos Peters

One way or another, right or wrong, there will probably be a cost to you to gain access to the angel investment you seek for your business – or as someone once said to me, “It costs money to get money.”



I have always taken this sentiment at face value, having put a few businesses myself in the path of investors via paid membership to angel networks; some I have seen success and others I have not.

Unfortunately many companies place the same expectations on gaining access to a discussion for angel capital as they do to access a bank loan

But it doesn’t work that way, here’s why…

In many instances a middle layer is involved in sifting, introducing and shaping the deal flow that is presented to investors. This layer could be a freelance intermediary, a corporate finance organisation, an online marketplace, or an angel network that brings investors together to see investment pitches. Either way, people’s time is involved and obviously there has to be a cost to pay for that time, as well as the effort, management and draw upon resources.

There is the ‘free’ DIY fundraising route and this is to be very much commended for those who know what they are doing and have a well put together offering (and I’m not just talking about the business plan when I say ‘well put together offering’). Developing one’s own investor relationships is extremely worthwhile. However, be warned that this could be slow and time consuming and at worst, you could have spent a lot of time and effort just to find out that you were a long way off from being ‘investor ready’.

If fundraising is not an imminently mission critical activity and you have the ability to put occasional time aside, developing your own pool of investors is extremely worthwhile. It will help you gauge better how your proposition will be seen by the investment community, enabling you to make tweaks and changes along the way. Alternatively, the angel networks and pitching events generally do a good job at getting your ‘investment ready’ basics out of the way and your business proposition polished up nicely.

The resource drain

For some time now I have wanted to look at putting some sort of estimated cost value on the resource, time and effort that is involved in the campaign approach to fundraising. In particular, two fundraising campaign approaches: 1. the in-house DIY approach and 2. the external hire approach

I then looked to see what data I could try and attach to the two.

For the DIY route I have been able to talk to executives within a biotech company that frequently has to undertake DIY fundraising to gain VC interest, as well as their bucks, to fund their latest projects. The chart below represents an approximated cost to the business in terms of time and money. I have adjusted the salary details downwards, to fall into line with a more likely salary position of an early stage company.

The details show the amount of time two individuals (the CFO @ 75% of his time and the CEO @ 50% of his time, both on £60k salaries) spend on fund-raising.

The chart shows an estimated in-house organisational cost of £37k to release 2 people to fundraise. I ran these equations past the company and they said the salaries for more established executives in their sector would be higher. The true financial cost for them, they said, would probably by closer to £80k each time they undertake fundraising.

So this is a typical costing of the resource time and effort. Now to look at the output from a typical fundraising campaign. Depth of Campaign

Occasionally, I take on the work of a fundraising intermediary/broker on behalf of a business that I think stacks up well for investors. This means that I sift and select business proposals/companies before presenting them to investors. It should be said that no two campaigns are the same. Some can last 2 months some 8. Some can get investment from just contacting 10 investors; some can get funded after contacting over 100. I’ll leave you with some of the results that I pulled from a recent 6-month campaign.

(Emails)

Total of emails generated between all parties (i.e Inbox total for this campaign) = 504 Total of the 504 emails that were from and to the company team = 186 Total number of emails to investment sources (504 – 186) = 318

(Investors)

Total number of investment sources contact by email (initially) = 132 Total number of angel investors approached = 77 Total number of investing groups approached (VCs & Funds, etc) = 55 Average number of emails sent to each investor source (318 / 132) = 2.4

(Contact)

Average number of phone calls to each investor = 4 Average time in minutes talking to each investor source (@ 2 minutes each call) = 8 Total time spent talking to all investors (8 mins x 132 investment sources) = 1056 mins = 17.6 hours Time spent on dead/fruitless calls – no replies, secretaries & gatekeepers (6 calls average, 30 secs each x 132 investors) = 396 mins = 6.6 hours Total number of meetings (including 2 scoping meetings with the company to start campaign) = 18

For more info please visit: http://www.ibusinessangel.com/2011/02/the-metrics-of-fundraising-from-business-angels/

Is this article helpful?

Comments

Cool

Cool

Good artile and really good video

Angels like startups who go from the bottom to the top -Drake

yeezy boost 350 v2

I simply wished to thank you so much yet again. I'm not certain the things I could possibly have done in the absence of the actual tricks shared by you on this industry. It became an absolute frightening issue in my view, however , observing this professi

nike huarache

Thank you a lot for giving everyone remarkably wonderful opportunity to read articles and blog posts from this web site. It is often very ideal plus stuffed with a good time for me personally and my office friends to search the blog at the very least thri

yeezy

Howdy! I simply would like to give a huge thumbs up for the great information you may have here on this post. I might be coming back to your blog for extra soon. yeezy [url=http://ezurl.me/1R]yeezy[/url]

huaraches

I simply needed to appreciate you again. I am not sure the things that I might have worked on without these basics documented by you about that problem. It was before a real challenging crisis for me personally, nevertheless considering a well-written tac

louboutin shoes

I would like to express thanks to the writer for bailing me out of this type of situation. As a result of exploring throughout the internet and obtaining opinions which are not pleasant, I figured my entire life was gone. Living without the strategies to

adidas nmd r1

A formidable share, I just given this onto a colleague who was doing a little evaluation on this. And he in truth bought me breakfast as a result of I discovered it for him.. smile. So let me reword that: Thnx for the treat! However yeah Thnkx for spendin

kate spade outlet online

I wish to show some thanks to you for bailing me out of this setting. Because of looking through the search engines and coming across thoughts which are not productive, I was thinking my life was done. Being alive without the presence of solutions to the

nike huarache

I needed to write you this very small note so as to say thanks a lot once again considering the incredible solutions you have shown at this time. This is certainly incredibly generous with you to present without restraint what a few people would've suppli

yeezy shoes

I wish to show my appreciation to this writer for bailing me out of such a problem. Because of exploring through the online world and obtaining ideas which were not pleasant, I believed my entire life was done. Living without the presence of solutions to

lebron shoes

I wanted to compose you that little observation to finally say thanks as before on the great concepts you've shared above. This is so remarkably open-handed of you in giving freely what exactly most people would have made available for an electronic book

golden goose sneakers

Thank you so much for providing individuals with such a breathtaking possiblity to read in detail from this blog. It's usually so beneficial and as well , full of a great time for me personally and my office colleagues to visit the blog not less than 3 ti

ultra boost 3.0

Thanks so much for providing individuals with such a superb chance to read in detail from here. It's always very pleasing and also full of a lot of fun for me and my office fellow workers to visit the blog a minimum of 3 times a week to see the new issues

lebron 13 shoes

I intended to compose you a little bit of remark to finally thank you very much as before considering the wonderful strategies you've shared in this case. This is simply seriously open-handed of you to present openly all a lot of folks would have marketed

ultra boost 3.0

My wife and i felt really more than happy Albert managed to carry out his survey through the entire precious recommendations he discovered while using the weblog. It is now and again perplexing to simply always be freely giving solutions that many many p

yeezy boost

I want to show some thanks to the writer for rescuing me from this type of circumstance. After looking throughout the the net and coming across opinions that were not helpful, I assumed my entire life was over. Existing without the answers to the difficul

nike lebron 14

I am commenting to make you understand of the perfect discovery my friend's princess undergone viewing your webblog. She even learned numerous pieces, most notably what it is like to have an incredible helping mood to make other individuals with no troubl

tom ford glasses

I intended to put you a little bit of observation to thank you very much as before on your striking concepts you've shared above. This has been so tremendously generous of you to grant unhampered what many of us might have advertised as an e book to end u

yeezy boost 350

I precisely desired to thank you very much all over again. I do not know the things I would have made to happen without these recommendations provided by you on this field. It seemed to be a very traumatic circumstance in my view, however , looking at the

jordan 11 retro

I wish to convey my love for your kindness supporting all those that actually need help on this important study. Your personal commitment to passing the solution around became definitely effective and have constantly helped folks much like me to get to th

air jordan 11

I simply wanted to appreciate you again. I am not sure the things that I would have achieved in the absence of the entire smart ideas documented by you on such a field. It seemed to be a very scary condition in my position, however , understanding a profe

adidas yeezy

I intended to compose you a bit of note just to say thanks yet again for those unique things you've shared here. It is quite incredibly generous of people like you in giving unhampered just what most of us might have supplied for an e-book in order to mak

air max 90

I would like to express appreciation to you just for bailing me out of this type of circumstance. Just after researching throughout the search engines and coming across proposals that were not pleasant, I figured my life was done. Being alive minus the a

Adidas NMD Men Women Mesh Surface Grey Khaki

I would like to show my respect for your kindness giving support to all those that really need help on your situation. Your real commitment to passing the message all-around turned out to be exceedingly invaluable and have constantly made some individuals

michael kors outlet online

I am glad for commenting to make you be aware of what a really good discovery our daughter encountered using the blog. She realized a good number of issues, not to mention what it's like to have a great coaching heart to make certain people without proble

yeezy shoes

Thank you so much for providing individuals with an exceptionally memorable opportunity to check tips from this website. It really is so pleasant and also full of a great time for me personally and my office fellow workers to visit your site more than 3 t

lebron 15 shoes

I together with my pals were looking through the nice advice found on your site while unexpectedly I got a terrible suspicion I had not thanked the web site owner for those secrets. The young boys came very interested to study all of them and have in eff

nike football boots

I intended to post you this little note in order to say thank you again with your stunning ideas you have shared on this site. It has been simply strangely generous of you giving extensively what many of us could possibly have sold as an electronic book t

yeezys

Thank you so much for giving everyone an exceptionally brilliant possiblity to discover important secrets from this website. It's always so sweet and jam-packed with a lot of fun for me and my office friends to visit your blog nearly three times per week

adidas outlet online

I have to show my admiration for your generosity in support of folks that really want guidance on this field. Your real dedication to passing the solution all-around had been extremely insightful and have in every case helped professionals much like me to

nike roshe run

Needed to draft you a bit of note in order to give thanks the moment again relating to the striking solutions you have provided on this site. It has been quite seriously generous of people like you to convey easily just what most people would've made avai

yeezy boost 350

I as well as my friends were found to be checking out the great information on your web site and suddenly got a horrible feeling I had not thanked the website owner for them. Most of the young men were for this reason stimulated to study them and now have

adidas yeezy

I am glad for writing to make you be aware of what a really good encounter our child had going through your webblog. She came to understand such a lot of pieces, which include what it is like to possess an awesome giving character to make most people real

asics running shoes

I not to mention my guys came looking through the nice ideas on your web site and instantly came up with a horrible suspicion I had not expressed respect to the web site owner for those tips. The women came for that reason passionate to read through all o

yeezy boost 350

I must point out my affection for your kindness for persons who really need help with this one field. Your very own dedication to passing the solution around turned out to be remarkably powerful and have continually made those just like me to reach their

adidas ultra boost

My wife and i got thrilled Chris could complete his homework through your ideas he made using your web pages. It is now and again perplexing to just be releasing concepts that some others could have been making money from. We really understand we've got

roshe shoes

I together with my friends have already been taking note of the best items on your web page and then quickly got a terrible feeling I never thanked the web site owner for them. My boys are actually certainly very interested to study all of them and have d

yeezy shoes

Thanks a lot for giving everyone a very nice possiblity to read in detail from this website. It's always so nice and also stuffed with a great time for me and my office friends to visit the blog at minimum 3 times every week to find out the new issues you

kyrie 4

I wanted to compose a quick word so as to express gratitude to you for all of the fabulous hints you are giving out on this website. My extended internet investigation has finally been compensated with excellent facts and techniques to exchange with my t

adidas tubular x

I happen to be writing to let you know what a fantastic encounter my child went through checking your web site. She came to find such a lot of issues, with the inclusion of how it is like to possess an awesome helping character to have many people effortl

retro jordans

Thank you a lot for giving everyone such a wonderful opportunity to read critical reviews from this blog. It is always very amazing and also packed with a good time for me and my office colleagues to search your blog at minimum three times weekly to learn

adidas nmd

I would like to convey my love for your kind-heartedness giving support to those who require guidance on this one idea. Your personal commitment to passing the message all through had become really significant and has consistently permitted many people li

nike roshe one

I actually wanted to construct a quick note to thank you for all of the wonderful recommendations you are giving out here. My extensive internet lookup has at the end been honored with excellent knowledge to exchange with my relatives. I 'd point out that

tom ford eyewear

I truly wanted to jot down a simple remark to be able to thank you for these superb techniques you are posting at this site. My rather long internet research has now been rewarded with brilliant facts and techniques to share with my visitors. I 'd express

Write something about this article:



Money Blitz Word of the Day

Debenture (promissory note)- This designation is a legal document detailing the terms of repayment and interest that a borrower is responsible for. It also details the principal amount owed and the maturity date. For example, financial institutions can approve qualified applicants for loans. They send out debenture or promissory statements to borrowers as a reminder of their legal contract.

Money Blitz Quote of the Day

"You must be the change you wish to see in the world." - Mahatma Gandhi

WatchList Quote

Major Index WatchList

EUR & USD Interactive Chart