I’ve been lucky to work with some of the best angel investors in the business.

When I started Akita, my angel investors were my mentor Jason Hong, superangel Elad Gil, #ANGELS co-founder Jana Messerschmidt, Eventbrite co-founders Kevin and Julia Hartz, Stanford professor Dan Boneh, and NBA player Kevin Durant. I became a more well-prepared and well-connected founder thanks to my angel investors.

When I first became a founder, I had little idea how much working with the right angel investors could help. This post is everything I would tell a first-time founder (who is headed down the VC-funded) route about working angels.

Akita’s fundraising story

The first check into my company was a SAFE from Jason Hong, a fellow CMU professor who has been an incredible mentor, both when I was in academia and after I became a founder. At the time, I had only been out of a PhD with a real job for two years and did not have the savings to bootstrap for long, so Jason’s investment was substantial. Jason’s uncapped SAFE gave me the runway to not worry about raising immediately.

Sooner than I expected, I raised a seed round co-led by Martin Casado at a16z and Mike Vernal at Sequoia. Once the round came together, there was only room for a small number of checks. Martin and Mike both advised strategic angels instead of friends and family to fill out the round, so that’s what we did. They put together a short list of angel investors who had been helpful to their companies and introduced me. We ultimately brought on Elad Gil, Jana Messerschmidt, Kevin and Julia Hartz, and Dan Boneh.

I was at dinner with my a16z investor Martin Casado when I told him I wanted investment from Kevin Durant. It was fall 2018, KD was playing for the Warriors, and he had won Finals MVP earlier that year. I was a KD fan and had heard he did tech investing. Martin said, “How sure are you that you want him?” He sent one text to someone who happened to be walking into KD’s house at that very moment. KD said congratulations and the following week I had Thirty-Five Ventures on my cap table.

My personal experience with angel investors

In 2017-2018, the first year of my company, Julia Hartz was running EventBrite so I worked with Kevin. This was before Kevin started his VC firm A*. During this time, he was spending a lot of time with founders and entrepreneurial folks. Kevin had incredible stories from his experience with Xoom and Eventbrite and I loved learning from him. One conversation that stuck with me: I was telling Kevin how my two lead investors had both interviewed a key product hire for the company. One was positive and one was in the middle. Kevin said to always be “strong yes” or “strong no” if I could help it. I still hire according to this philosophy today.

Jana Messerschmidt was probably my angel investor who was the most generous with her time and introductions. Jana was transitioning from doing angel investing to being a venture capital investor, having just started a job at Lightspeed. As a former exec at Twitter and Netflix, she had a fantastic network and especially in developer experience. Jana introduced me to developer experience executives, founders who had been good at developer experience, and ex-founders who gave great founder advice. Jana gave me great advice about how to leverage my investors: for instance, she told me to make a spreadsheet of customers I wanted warm introductions to and send it around. Jana telling me about how Crashlytics engineered themselves to go viral and introducing me to Jeff Seibert had a huge influence on how I think about developer products.

Elad was elusive but the angel who was most consistently influential and supportive during my entire five-year run at Akita. We had a fifteen-minute call almost every quarter, sometimes at an unpredictable time, but always full of great guidance. When I was pivoting the company in 2020, saying that my original space was not working, Elad reminded me it was working for other people, just not Akita, but that’s okay. When I was gearing up for what I knew would be a tough fundraise in 2023, Elad went to work, making introductions to several promising potential investors. Elad has somehow seen every single startup situation and knows so many different founders that he had something concise and on-point to say in every single situation.

Figuring out when and how to bring on angel investors

You can either think of angel investors as the first checks in, or filling out a round. In my case, I had both: Jason Hong’s check gave me runway as I figured out my fundraise. I met my strategic angels once I decided on my investors.

Having good angels early on can help you get advice and introductions early on. That said, a lot of folks in the ecosystem will pay it forward and help you even if they are not involved as angel investors. My earliest angel investor Jason Hong was definitely helpful to me early on with advice, book recommendations, and stories from when he started Wombat Security. I also learned a lot from other ex-founders who were generous enough to give me 30-60 minutes of their time. I also cashed in pretty much every favor from friends and family to meet potential investors and to get feedback on the early product. Most of these people weren’t investors!

Strategic angels. Strategic angels are who I filled my seed round out with after securing institutional VC investment. These are folks who you add to the cap table for complementary reasons to your institutional investors. Some strategic angels invest full-time; others are operators in a similar space to you. Some folks will bring on strategic angels for social proof. When it looked like the seed round was just going to be Martin from a16z, we had started throwing around names of angels that would be good for filling out the round. After we split the round with Sequoia, Martin told me the split alone was enough proof. We were able to then choose angels completely based on gaps in our networks and expertise.

Vanity angels. There’s a difference between a strategic angel and a vanity angel, a celebrity who invests in companies. These angel investors are less likely to be active in working with companies than institutional investors or strategic angels. They often have more name recognition to friends and family and junior hires. A lot of celebrities coinvest with major venture capital firms and many have their own family offices or investment staff. For instance, in working with Kevin Durant interfaced with his investment organization Thirty-Five Ventures, which was more extensive than I had initially expected. Folks will generally work in organizations like that if they have investing ambitions of their own and they were more helpful than I expected in offering introductions. I like the advice to have no more than one on your cap table.

Friends and family. Outside of my mentor Jason Hong, there is one kind of investor missing from my cap table: friends and family. My decision not to take friends or family investors for Akita came out of a personal hesitation to mix friendship with business. There was also little room left in the round by the time it got split between two institutional investors. In some of my tougher moments of Akita, the folks who ended up being the most motivated to help were the friends who had offered to invest, but who I didn’t end up working with as investors. In my own experience on the other side as an investor, the situation where I was probably the most helpful was one with a good personal friend, but it was also a situation where I would have probably given the same support regardless of the investing relationship. For me, jury’s still out about friends and family investors, if you’re also taking VC funding.

Leveraging your angel investors

When I first started working with Kevin Hartz, he said an investor relationship was like a gumball machine, except with help. You ask for help and you get help.

The best advice I have about working with your angel investors: get to know them. One to two times early on is enough to build a relationship. If they’re helpful, even 15-30 minutes once a quarter or half can go a long way. The more they know about where we are, the more they can help. Plus, these folks were way more experienced than I was with startups. Even offhand stories from their own startup experiences, or those of companies they worked with, were incredibly educational to me. The more they know about who you are, what you’re doing, and what you need, the more they can help. And the more you know about how they can help, the more you can lean on them for help.

The easiest way to keep in touch and stay top-of-mind for your investors: send monthly investor updates. The updates provide context to investors that help them help you: what stage the company is at, what the next big milestones are. At the end of each update, I would always put three to five specific requests for the investors, from helping with introductions to helping with hiring to helping amplify a launch. Upon the recommendation of one of my investors, I also put thank-yous to investors who helped the previous month. The combination of asks and shoutouts consistently got me helpful responses from my investors.

There’s also one more important thing to understand about angel investors: angels can help in ways that institutional investors cannot. There’s one major reason underlying this: if a VC investor is doing their job well, they will make sure to keep investing in your company until they have a good amount of ownership. This means it is against their incentives to introduce you to other investors or do anything else that interferes with their ability to buy more shares in your company for a good price. Angel investors, on the other hand, are generally not jockeying for a large portion of your next round and everybody knows it. This allows them to play a much bigger role in helping you fundraise, from introducing you to other VCs to talking up your company to generate more interest across different VCs.

My perspective from the other side

There’s a whole spectrum of how investors and companies work together and everybody will tell you something different, so I’ll end with telling you about my specific take on angel investing, in case that helps founders who are trying to learn how to think about the whole thing.

I angel invest primarily through my scouting relationship with the VC firm Andreesson Horowitz. They give me a budget for investing in each fund and I get a fraction of the carry. The goal is to invest in companies I’m excited about, that also fit the profile of high-growth companies a16z would be excited about. I started scouting for three reasons. First, it gives me more skin in the game to keep up with not only my space but adjacent spaces. Second, I’m happy to pay it forward if I can be helpful. Finally, startups have an unmatchable energy and great founders are fun to be around.

My criteria for companies I decide to work with: I’m excited about what they do and believe I can help. Angel investing is a hobby for me, so it’s really about where I get energy and what I want to be thinking about in my limited free time. I discovered I am almost exclusively interested in infra companies where the team is building a product in a B2B SaaS domain I’m familiar with. I particularly like product-led growth and I love developer tools. As for the specific companies, I need to first and foremost understand and believe in the problem they’re solving: it’s usually a problem space I’ve looked at myself, am interested in looking at, or have personally experienced. Then everything else I care about is fairly standard: how well is the team executing; do they have the differentiation necessary to take them all the way.

Parting words

If you’ve read all the way to the end of this post, you probably know way more than I did when I started Akita and brought on my angel investors. But I also recognize that I was extremely lucky and would like to help you create your own luck.

So if you’re going the VC-funded route, cap space will be limited, signalling matters a lot, and your network can go a long way in helping you signal. Choose your angels well and they can help you a lot! 😇

With thanks to Umesh Khanna, whose Forward Deployed Angels series got me thinking about the importance of demystifying the angel/founder relationship. Thanks Umesh for kicking off the series by featuring TLDC and me!