The Veiled Dance of the Angel Offering

By Mitchell Hymowitz

Much has been said about the technical process, business plan, and legal preparation that go into building a start-up company for an angel equity offering. It’s all true, and without it no offering would be successful. But there’s more to orchestrating an offering than a business plan, IP, due diligence documents, and a reasonable term sheet. There’s a bit of stagecraft required. Smoke and mirrors? No, not at all…but there’s a dance to be done. Here are the steps:

If you ask for money, you’ll get advice. 
If you ask for advice, you’ll get money.
Therefore, never ask for money.

This rule is critical until you have all of your ducks lined up. You never want to ask for money before you’re ready. Doing so runs the risk of hearing the word ‘no.’ It is significantly harder to turn a ‘no’ into a ‘yes’ than it is to get a ‘yes’ in the first place.  Therefore, until you are ready to ask for money, DON’T.

Instead, ask for advice. In receiving advice you’ll learn which investors know your space and can be good resources for you. Over time you can have multiple conversations with potential investors, and because you’re asking for advice rather than money, you’ll have time to build a relationship. As an investor sees how you take constructive suggestions, and watches your business progress, it becomes much easier for the angel to offer money in support of what he has helped nurture.

Find a lead.

Angels travel in packs. This is important because, it takes a group for investors to complete a round. Investors like to have other investors whom they respect also involved. It validates their decision and increases their comfort. Quite simply, people like to invest alongside of people they like to invest with.

The key to making this happen is finding a lead investor: one person who will personally lead the due diligence process, place his or her stamp of approval on the terms, commit to a significant investment, take a board seat and put the word out to the angel community that “I am leading this round.” Whether your lead comes as a result of a presentation at an angel group or the result of Rule One, don’t start rounding up a closing until you have one.

Momentum, Mo’mentum

You have many reasons to get the round done yesterday. Too bad your investors don’t.

The more you rush the investors’ decision-making process, the less comfortable they become. You have many decisions to make, whereas they only have one: whether they’ll invest with you or not. The challenge, then, is  to impart a sense of urgency to your investors.

Your passion needs to engender a sense of urgency in your angels so that this becomes a front-burner project for each of them rather than a matter of, “Okay, yeah, I’m thinking about it. Lemme get back to you next week.”

Telling prospective investors that you’re running out of money or tired of eating ramen won’t do it (nor will it improve the terms you’ll receive). You need to manage your seed capital and burn rate to get you through the process. The key factor is imparting momentum to the process. You’ll find this much easier if you’ve followed Rules One and Two.

By using all three of these tips, you will be on your way to enticing investors and seducing them to act quickly on your offering. Now start your stretching exercises. It’s not required, but it helps.

Mitchell Hymowitz is one of the Pacific Northwest’s longest-tenured and most experienced consulting CFOs. Mitchell Hymowitz provides, though his firm CFO Services LLC, interim- and project-oriented CFO consulting services to developmental and turnaround stage companies. He has extensive experience in the financing and development of emerging companies having worked on over 75 financings and M&A deals valued at over $450 million in fields ranging from pharmaceutical and medical device development, to software and e-commerce, to consumer goods manufacturing and distribution.  He has also served as the CFO of a publicly-traded radio broadcasting group and held various corporate finance and management positions in the media and entertainment businesses in New York City.  He holds a BA from Rutgers and an MBA from The Stern School of New York University. You can contact Mitchell at

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