Yi-Jian Ngo knows a thing or two about fundraising for startups. As Managing Director of the Alliance of Angels, he oversees the Northwest’s largest and most-active Angel network that facilitates $10MM+ investment across 20+ companies each year. Galvanize recently sat down with him to hear what words of advice he has for early – mid stage companies.

Pre-Seed Strategy: Angel Groups Vs. Individuals

Depending on the size of the round you’re raising, there are clear advantages and disadvantages to each. Meeting with individuals is a far more personal experience. If you are raising a relatively small round, ~$100k, it is be highly advantageous because it will take one meeting. However, if you are raising $500k or more, it becomes more time-consuming and far less efficient than pitching to groups. But, pitching to groups has disadvantages. If you are successful it will lead to multiple investors, which is a good thing, but due diligence often takes longer.

In-Person Pitches

The first level of in-person pitches is the 20-120 second elevator pitch. You’ll often hear terms like “Uber for moving” or “Air-BnB for warehouse space.” The goal of this interaction is to gauge interest and request a follow-up meeting to discuss further.

The second is the demo day style pitch. This is when you have a captive audience and have the ability to take 5-10 minutes to dive into a few details to really gather interest. Once again, the intent here is to schedule another meeting.

The third and final in-person pitch is the investor pitch. This the only pitch that matters. It should be fine-tuned to suit your audience and address all of the standard points. To cover the investor pitch would require it’s own entire post, but for prime example of pitch decks from some of the biggest unicorns check out 30 Legendary Pitch Decks and What You Can Learn From Them.

How Much Should You Pay Yourself?

This is a highly disputed question. Should all founders be living in their mom’s garages eating ramen? What about experienced founders with exits under their belts taking home large salaries?

According to Yi-Jian it depends on the circumstances but there is always one common factor: is the Founder happy? If you are starting a company fresh out of college and can live on $2500 a month, do that. If you can live on nothing, awesome. If you have a family, a mortgage, and bills to pay, it makes sense to take $60-$80K.

In addition to the Founder Happiness rule, Yi-Jian also says that there is a common trend when raising capital. When companies raise a Series A round they are no longer on what many would consider a shoestring budget. He says that at this point a founder will usually take $100-150k salary on a $3MM round.

Fundraising Metrics

What metrics do investors want to see in their meetings?

At the angel stage it’s not in the numbers, necessarily. There are many more variables that are difficult to measure and need to be addressed first.

Individual investors want to see the following questions:

1. How good is your team?
2. What problem does your product solve, and do people care?
3. How are you going to tell more people about it?

Numbers can be the most persuasive part of any pitch. They are the things that push investors to say yes. Far more investors are pushed to say no by founders not answering those three key questions.

Yi-Jian’s final piece of advice was about managing expectations and relationships with investors before, during, and after the fundraising process:

“Ask for money and you get feedback; ask for feedback and you get money.”

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