editione1.0.1Updated September 19, 2022
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There are a number of benefits to investing in local startups. When considering making an investment, you may want to visit the startup’s office, talk to key team members, and perhaps see a demo of a not-yet-released version of a product. You will want to get to know the CEO over the course of several meetings. Many of these activities are more easily done if the company is within an easy drive.
Once you’ve decided to move forward with the investment process, being physically close to the company makes it easier for you to stay in touch with the CEO over the occasional lunch, and perhaps introduce them to potential local hires or customers. In the event that things go poorly with the company after you invest, or they are unresponsive to your inquiries, you will be able to just go to their offices and talk to them. Finally, by investing locally, you will be helping your local startup ecosystem.
You can learn more about investment opportunities in your community through the following channels:
Angel investing groups. Angel investing groups are a great place to get exposed to potential investment opportunities. We discuss this in detail in Joining an Angel Group.
VCs. Introduce yourself to the early-stage VCs in your town. Let them know you are looking to invest and ask them who the prominent local angels are.
Accelerators and incubators. Research the local startup accelerators and incubators and introduce yourself to them. You can offer to be a mentor if you have the time, but at a minimum let them know that you are an accredited investor looking to make investments and ask to be invited to their demo days.
Universities. Many universities now have entrepreneurship programs, and they may be open to having local angel investors attend their demo days or meet with their student teams to provide feedback and advice.
Meetups. Meetups are a good place to get to know entrepreneurs. There are a surprising number of meetups focused on startups. In addition to searching Meetup.com for “startups” or “entrepreneurs,” try some of the hot topics in the startup community such as “lean startup” or “lean analytics.”
Co-working spaces. Co-working spaces are also an excellent place to find startups. In many cities there has been a proliferation of co-working spaces targeted specifically at founders. Check the calendars of these spaces, as they often have events where you can begin to network into that community. In many cities you can find local chapters of startup-centric organizations like Startup Grind that put on regular events that cater to entrepreneurs.
If you don’t live somewhere with a robust startup ecosystem, or if you are looking for startups in quite specific technologies, you may have to look more broadly.
Let your network know that you are interested in making angel investments. Mention angel investing on your LinkedIn profile. You will be surprised at how many people reach out to you. You can also join investor-centric networks like AngelList, where many entrepreneurs may be looking for investors who share an interest or expertise in their industry.
Whether you are interacting with the local startup community or creating a profile on a national site like AngelList, it will be helpful to have an elevator pitch about the types of deals you are interested in. You might be interested in a particular industry or technology focus or a stage of company. Communicating your desired focus will help get the right deal flow while minimizing the noise.