What Do Angel Investors Want? A Protégé

What Do Angel Investors Want? A Protégé
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By Debi Kleiman, Babson College

This article was produced in partnership with Babson College and was originally published on Footnote, a website that brings academic research and ideas to a broader audience.

When investors choose to fund a company, they look closely at the strength of the team behind it. "We are backing the founders as much as, if not more than, the business itself," writes venture capitalist Christian Hernandez Gallardo. There's even a firm called Entrepreneur First that takes this idea to its logical extreme, funding talented entrepreneurs before they have a business concept worked out.

What is it, exactly, that investors are looking for in a founder? Skills and experience are obviously important, and a degree from a highly-ranked school or past stint at a tech giant is sure to impress. Less tangible personal and relational factors also play an important role. Studies show, for example, that entrepreneurs who are perceived as trustworthy are more likely to receive investment offers.

Another important factor that is often overlooked is the potential relationship between investors and founders. Investors want to back entrepreneurs who they can mentor. Because many investors believe their time and expertise to be just as valuable than their money, they want to invest in companies where their personal involvement can have an impact. This means looking for entrepreneurs who are "coachable" - that is, receptive to feedback - and who can benefit from the specific guidance they have to offer.

Several academic studies have demonstrated the impact coachability can have on an entrepreneur's chances of securing funding. A 2010 study led by Northeastern University's Cheryl R. Mitteness showed that coachability influences whether angel investors recommend moving forward with a company after a pitch. Recent research by my colleague at Babson College, Dr. Lakshmi Balachandra, found that the more willing an entrepreneur is to accept feedback and engage with suggestions that are offered during a pitch, the more interested investors are in pursuing the company.

Dr. Balanchandra's study found that coachability has an impact regardless of how strongly investors rank a business's economic fundamentals or the competence of the team. This suggests that cultivating and demonstrating a willingness to learn can give entrepreneurs an extra edge, even if they don't increase their team's skillset or boost the business's cash flow, which can be much more daunting to achieve.

The lesson of this research for entrepreneurs is that many investors want to play a role in the success of the businesses they fund by providing mentorship and guidance. Given the wealth of expertise most angel investors have, that's a good thing - it just requires a more tailored pitch. This is because, as research demonstrates, investors are more likely to respond positively to a pitch if it is in an industry where they have experience and expertise to offer.

Entrepreneurs need to sell investors on not just their businesses and themselves, but also their compatibility with the investors' expertise and interests and their willingness to learn. The good news is that coachability is almost entirely within an entrepreneur's control. While you can't learn to code or add an impressive job to your resume overnight, anyone can try to be more open to advice and mentorship.

How can you make sure your eagerness to learn comes across in a meeting or pitch? Take an interest in the perspectives of investors and show appreciation for the experience and advice they have to offer. Rather than coming across as defensive when they provide feedback, ask clarifying questions and probe for more insight in an interested way.

It's not enough to simply receive feedback - you also need to act on it. Researchers from the University of Central Florida and Elon University conducted a study to define and measure coachability among entrepreneurs. They found that coachability involved a willingness not just to listen, but also to act on the advice of others and integrate their feedback into the business. With this in mind, you should follow up at the end of the pitch or shortly afterwards about next steps you plan to take based on investors' feedback.

Babson M.B.A. Rich Palmer has found these techniques essential in helping his startup, Gravyty, engage angel investors and incubator programs like MassChallenge and benefit from their guidance. Rich and his co-founder make it their goal during any meeting or pitch to hear what is on investors' minds, rather than just sharing their ideas.

The Gravyty team aim to listen 80% and talk 20%, and keep their responses short so they can get in as many questions as possible. They also keep track of everything people suggest, even if they disagree with it, and take criticism as constructive rather than getting defensive if someone doesn't agree with their approach.

Investors who are looking for potential protégés aren't only concerned with the entrepreneur's willingness to learn. They are also considering where they fit into a business's success, as the research demonstrates. Make sure to emphasize ways in which you and your business align with investors' interests, expertise, and other investments. If it's not readily apparent how an investor might help you, call out the connections explicitly and present a vision of how they fit into your business's success.

Like many of us, investors are ego-driven, not in the sense of being self-centered, but in wanting to have an impact on the businesses they fund. They have expertise to share and they want to put it to use just as much as their money. Most entrepreneurs know that not all funding is equal, and the guidance and connections they get from investors can be just as important as the capital. What they may not consider is that investors know it too.


  • (a) A recent study on the popular platform AngelList demonstrated the importance angel investors place on the team behind a startup. When AngelList emails promoting companies to prospective investors included information about the founding team, investors were more likely to want to learn more about the business. In comparison, including information in the email about other investors in the company or growth in sales or users had no effect.


  1. Balachandra, Lakshmi (2011) "Pitching Trustworthiness: Cues for Trust in Early-Stage Investment Decision-Making," Working paper available at SSRN: Maxwell, Andrew L., and Moren Lévesque (2014) "Trustworthiness: A critical ingredient for entrepreneurs seeking investors," Entrepreneurship Theory and Practice, 38(5): 1057-1080.
  2. Mitteness, Cheryl R., Richard Sudek, and Melissa S. Baucus (2010) "Entrepreneurs as authentic transformational leaders: critical behaviors for gaining angel capital," Frontiers of Entrepreneurship Research,30(5).
  3. Balachandra, Lakshmi, Harry Sapienza, and Dennie Kim (2014) "How Critical Cues Influence Angels' Investment Preferences," Frontiers of Entrepreneurship Research, 34:1.
  4. Ciuchta, Michael P., Chaim Ross Letwin, Regan M. Stevenson, and Sean R. McMahon (2015) "Betting on the coachable entrepreneur: Introduction of a new construct and scale," Academy of Management Proceedings, 2015(1).
  5. Gupta, A. K., and H.J. Sapienza (1992) "Determinants of venture capital firms' preferences regarding the industry diversity and geographic scope of their investments," Journal of Business Venturing, 7(5): 347-362.
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