Like Buying a Diamond Ring
How to maximize the value of angel network membership through a well-crafted pitch event
$14 Billion
Last year, the average engagement ring cost $5,800.
There were 2.4 million weddings in the US.
That represents a market size of about $14 billion.
Why am I Telling You This?
Two reasons:
Because 85% of those rings featured a diamond as the center stone, and I think angel investors are a lot like diamond ring buyers.
Because it’s interesting.
How on Earth are Angel Investors Like Ring Buyers?
Great question.
In today’s post, the answer to that question will frame our discussion of how angel network operators can deliver maximum value to their members through a well-crafted pitch event.
The Observer Express
Don’t have time to read the entire post right now? No worries, here are the main points:
Angel network members are like diamond ring buyers. The diamond is usually the focal point, but the diamond cannot be fully appreciated without the support of the ring, which enhances the beauty and value of the entire piece. In the same way, meeting interesting startups is the focal point for angel investors.
However, the startup cannot be fully appreciated without the support of the recurring pitch event, which enhances the value of the entire experience. This “package” is what network members purchase each year. Therefore, to maximize the value of membership, network operators must devote themselves to thoughtfully crafting a high-quality event experience.
What does a network operator need to do to facilitate a great pitch event? 6 things:
Honor the founders.
Keep it consistent.
Make it easy.
Create space to connect.
Cast the vision.
Reinforce the culture.
Look at That Photo Again.
What part of the image draws your eye?
The diamond.
The diamond is the focus.
But You Can’t Wear a Diamond Without a Setting
Diamonds by themselves are undeniably beautiful. But you can’t have a diamond ring without the ring part. The setting serves several purposes:
It fits the wearer’s finger and makes the piece wearable.
It provides structural support for the diamond.
It enhances the diamond’s beauty by reflecting light and making the stone “sparkle”.
It contributes its own beauty and character to the overall piece.
The diamond may be the focus, but a well-crafted ring supports and enhances the diamond’s beauty.
Now Think About the Last Startup Pitch Event You Attended
What part of the event is your mind drawn to?
The startups.
The startups are the focus.
But the Startups Aren’t Everything
As I discussed two weeks ago, the pitch event is an amazing way to help investors decide if they are interested and want to learn more about the startups being presented. But you can’t have a pitch event without the event part.
Angel investors typically pay a fee to be part of an angel network. They do so for a variety of reasons, but I believe the most common reason is that they value the deal flow offered by the network. When networks do a great job at identifying diamonds through Angel Ops Step 1: Source, and Step 2: Evaluate, investors take note.
However, just like a couple buying an engagement ring isn’t only buying the diamond, investors aren’t only buying the deal flow. Like a ring enhances and supports the diamond, pitch events enhance and support the value of startup deal flow for an investor.
How does a Pitch Event Accomplish This?
The pitch event is typically the primary activity that brings investors together on a recurring basis, and it provides value to members in a few ways:
It provides consistency and structure for considering deal flow.
It facilitates community and connection between investors, founders, and operators.
It offers an opportunity to lean into each community’s “special sauce”.
To maximize the value of membership in a community of investors, crafting a high-quality pitch event is essential. That brings us to this week’s job: Run a Great Pitch Event.
Angel Ops Step 3: Engage, Supporting Job #2: Run a Great Pitch Event
As a quick refresher, Angel Ops, which I introduced in this post, seeks to map an answer to the following question: What does the process at a world-class angel network look like? Angel Ops is focused on the backend process of running deals and groups the workflow into 5 core steps. In last week’s article, I introduced the first job within the Engage step: Prepare & Distribute Investor Materials, which involves preparing members with an effective pre-read. The overall objective of this phase is to connect the best applying companies with network members and gauge interest, which culminates in a decision to proceed with deeper scrutiny.
Engage
Job: Connect the best companies with the network and gauge member interest.
Progressive Outcome: Proceed - Deals with sufficient interest move on to receive deeper scrutiny.
Within each core step, there are 3 “supporting” jobs-to-be-done that contribute to the primary job. This week, we’ll explore the second supporting job within the third step: Run a Great Pitch Event.
What Makes a Great Pitch Event?
After helping facilitate dozens of pitch events and attending many more, I have come to believe there are 6 key things network leaders and operators must consistently deliver to run a great one.
Honor the founders.
Keep it consistent.
Make it easy.
Create space to connect.
Cast the vision.
Reinforce the culture.
I could (and just might) write a full post on each one of these points. For now, let’s briefly review each one. As you read, consider how effective your angel community is in delivering on each of these areas.
1: Honor the Founders
In this post, I’m specifically highlighting how “the other stuff” is important, but it’s important to keep in mind that the founders and the startups they represent should always be the primary focus of a successful pitch event. As a network operator reviewing hundreds or even thousands of startup applications every year, it can be easy to become callus towards founders. But operators must never forget that launching and growing a startup is a ridiculously difficult job, and most know they’re likely to fail. Therefore, taking special care to honor founders well throughout the event is a great way to support them along their journey, regardless of whether or not they receive funding.
2: Keep it Consistent
Is the pitch slot 15 minutes long? 20 minutes? Do we start at 9 am or 10 am? Is lunch included? How long is the event? How many companies will we see? What does the follow-up process look like (more on that next week)?
Whatever your chosen format is - stick to it. Consistency allows the process to be built and communicated clearly to founders, investors, and team members alike. Now, I’m all for experimentation, but the point here is to be very thoughtful about those changes. Whiplash is not a pleasant experience.
One tip here is to consider aligning major changes/adjustments if and when they’re needed with a new membership year. Most of the major changes I’ve observed at angel networks have taken place around the new year when yearly budgets and plans are finalized.
3: Make it Easy
I’ve learned that the easier something looks, the more work it probably took to get there. It takes a lot of time, energy, and coordination to execute a great event, whether in person or virtual. There are venues to book, refreshments to order, agendas to share, and thousands of small logistical steps in between to handle.
In this category, event coordinators are worth their weight in gold. For angel investors and founders to have a great experience connecting with each other, an easy and convenient experience attending the event itself is table stakes.
4: Create Space to Connect
I’ve come to appreciate that angel investors who join an angel network are often in search of a specific type of community. They want to connect with other investors interested in similar things. They want to connect with founders building cool things. They want to learn from you, from their peers, and from these crazy startup founders. They want to be involved. Otherwise, they could simply hop into an AngelList syndicate or hire a money manager to participate passively.
The best events deliver. They provide some avenue for that connection. Perhaps it’s an extended networking time. Maybe it’s happy hour afterward. Maybe it’s lunch, member discussion, large breaks between presentations, or something else entirely. The specific mechanism is less important than the fact that a mechanism for connection exists.
5: Cast the Vision
Why are we here? What are we trying to accomplish? Where are we going?
In any organization, the role of the leader is to cast the vision, recast it, and cast it again and again and again until their lungs give out. That is as true in an angel network as it is anywhere else.
An angel network without a vision is not likely to grow. In contrast, one with a strong leader (or set of leaders) driving towards something worthwhile and consistently casting that vision will be hard-pressed to do anything other than grow.
6: Reinforce the Culture
What’s the special sauce? What makes this community different from all the other angel communities or investor groups?
I’ve noticed that thing (or set of things) features prominently in the most successful pitch events. Simple examples of this include: introducing members to the students from the affiliated university that are getting exposure to founders and investors, giving preference to hosting startups located locally/regionally, or including training/education around focus content. The possibilities are endless, and much of the “culture” evolves naturally over time. The point is that it’s essential to keep that “special sauce” in clear view of every single event.
Final thoughts
Angel network members are like diamond ring buyers. The diamond is usually the focal point of the purchase, but it cannot be fully appreciated without the support of the ring. In the same way, meeting interesting startups is the focal point for angel network members, but that focus is enriched by the recurring pitch event. To maximize the value of network membership, community operators must devote themselves to thoughtfully crafting and running a great pitch event, which can be accomplished by nailing the 6 key requirements I introduced today.
What do you think?
Which area is your angel network weakest in? Which area is it strongest in? Are there other key requirements for running a great pitch event?
Weekly Observations: 3 Lessons Learned
🎨Graphic designers are worth the money.
Last week, I held the position that our standard reports looked pretty good. This week, that opinion has completely changed. We finally hired a graphic designer to help us level up the look and feel for one of our reports. I now cringe when I look at our original designs because the new version is just exponentially better. Lesson learned: designers are worth the money.
📋Editorial workflows are amazing.
This week, per our designer’s recommendation, I learned how to use Adobe InDesign and InCopy. I had no idea this software existed before, but the suite includes some crazy helpful editorial workflows. For example, over the last few days, I created templates for each of our 3 primary styles of reports. I specified certain sections as “editable” and others as “fixed.” Now anytime we create a new report, I can generate “assignments” that allow an analyst to work within strict boundaries and only on the copy I want them to be able to modify. Once they’ve finished loading their content, the designer can auto-populate the template with the analyst’s copy, review the design to make sure everything’s kosher, and publish. After creating dozens of reports over the last year, our team is very excited about this new workflow. It saves the analyst time worrying about formatting/editing while simultaneously ensuring visual quality and brand alignment.
👍Microsoft has its own Notion competitor called Loops, and it’s pretty good.
Back in January, our team decided to go full Microsoft suite for business ops since we were all most familiar with that interface. So, love it or hate it, if you meet with me, it’ll be via Teams call. Anyway, this week I spent an hour setting up Microsoft Loop for our team. It’s got some pretty slick integrations and auto-updates across all platforms. There are definitely some improvements to be made, but I’m a fan and recommend giving it a shot if you’re a Teams user like me.
Thanks for reading, have a great week.
-Andrew