How did you hear about us?
A reflection on the importance of an angel network's marketing strategy
“How did you hear about us?”
We find ourselves asking and answering this simple question all the time. Whether we’re hiring a plumber, filling out a job application, or signing up for a gym membership, we’re constantly being asked how we got connected.
Why?
Because the answer reveals which marketing channels are working for whoever is asking.
For Example 🏋️
Consider 2 gyms that both sign up 100 new members in a month. Gym 1: new members are not asked how they found out about the gym. Gym 2: they are asked this question when signing up, and the answer is permanently recorded in their member profile.
All else being equal, it’s clear that Gym 2 is at a significant advantage.
Why? Because they have data indicating that 53 of those members were referrals from existing members, 22 saw a social media ad, 18 saw a flyer or poster, and 7 found them by searching “gyms near me” on their favorite maps app.
If you were in charge of allocating a $5,000 marketing budget, which situation would you rather be in?
In both scenarios, the gym is generating the same amount of revenue. Yet when it comes time to allocate the marketing budget every month, Gym 2’s management can make data-driven decisions about where to deploy those dollars. And, since the source is permanently associated with each member’s profile, they can track the longevity and quality of each member by referral source. This allows the team to constantly map their marketing dollars to the sources that generate the greatest performance over time and to continually optimize.
Here’s the point - the best angel networks do the same thing.
A Dozen Times
This week, I analyzed the application to pitch at 12 different angel networks. It was fun (check out Weekly Observations below for more).
Guess what question most of them had at the end of the application?
“How did you hear about us?”
This pattern suggests 2 things:
Angel networks want to be found by startups
Angel networks expend resources to make sure they are.
It is the responsibility of the network operator/leader to make sure startups can discover the network when it comes time to raise funds. Collecting feedback on which sources are most effective allows leaders to optimize their marketing efforts going forward. This highlights the focus of the first step in the Angel Ops process and this week’s supporting job.
Supporting Job #2: Market the Network
As a quick refresher, Angel Ops 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. The goal of the first step, Source, is to bring in sufficient deal flow to operate the network by having founders apply to pitch (either formally or informally).
Source
Job: Bring in sufficient deal flow.
Progressive Outcome (PO): Apply - Founders apply to the network.
Within each core step, there are 3 “supporting” jobs-to-be-done that contribute to the primary job. In last week’s article, I discussed the first one at the Sourcing stage - to build and maintain relationships. This week, we dive into the second - to market the network.
What is Marketing?
According to the American Marketing Association, “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”
This definition is a helpful start but is a bit too academic for my taste. Here’s a simpler definition drawn from Investopedia: “Marketing refers to activities a company undertakes to promote the buying or selling of a product or service.”
What if we translated this definition into the world of an angel network operator focused on attracting great founders? Here’s my best attempt: Marketing refers to the activities an angel network operator undertakes to promote the purchase of startup equity.*
Assuming a group of investors has elected to band together and join this network, the “offer” they present to the market is, at its core, an offer to purchase equity in a startup. There are a host of other nuances and components, but that is the essential transaction the group sets out to complete. As I discussed in a previous article, an angel network’s primary purpose is to produce these kinds of deals.
*Note: This definition specifically includes startups (as opposed to small businesses). It should also be noted that the two common funding instruments, the SAFE and CDN, are not technically considered equity. However, since the the objective of both these instruments is to convert into equity at a later date, they are used synonymously with equity here. For more information on SAFEs and CDNs, check out this article that my friend Mike Lodzinski and I wrote.
How Does this Work?
In last week’s article, I mentioned having spoken with several groups who “have plenty of deal flow”. I gave a few reasons why I believe they’re full, and the first of those is that they have a powerful brand and receive substantive inbound interest.
I’m no marketing expert, but what I do know is that marketing efforts are typically broken down into two broad categories: outbound and inbound marketing.
Outbound marketing can be thought of as “push” marketing, where the company initiates an engagement with the potential customer. This commonly includes things like cold calling, running advertisements, or traditional sales efforts.
Inbound marketing, on the other hand, can be thought of as “pull” marketing, where the company creates material that spreads brand awareness and encourages the customer to lean in. This commonly includes things like social media content, website content, search engine optimization (SEO), and blog posts.
While there is certainly a place in the angel network operator’s marketing strategy for both approaches, one unique challenge is that it can be exceptionally difficult to locate new startups. Many times, these companies are no more than a few months old, so it’s unlikely that a traditional outbound strategy would be particularly effective.
As a result, I typically see angel networks rely more heavily on inbound marketing strategies. Seminars, active social media pages, optimized web content, and other inbound strategies tend to work well for angel groups. When combined with organic referrals from membership, from other stakeholders across the early-stage ecosystem, and from other founders who have worked with the group, a strong brand image and inbound marketing strategy is often extremely effective at driving startup applications.
Closing Thoughts
The exact marketing strategy each network employs will vary according to the specific objectives of the group. What matters is that there is a strategy and that the network approaches its founder marketing with consistency and thoughtfulness. And, as illustrated by the example I opened with, collecting constant feedback about which sources of deal flow are most effective is essential.
What do you think?
Where do you see angel networks focus their marketing efforts? What have been some of the most effective strategies you’ve seen implemented?
Weekly Observations: 3 Lessons Learned
Applications suck. 📝
This week I finally did it. I gritted my teeth for 11.7 hours and I did it. I personally went through every single question asked by 12 different angel networks in their online application to pitch. To make one mega application. We call it “The Beast”. Besides learning what it’s like to hear fingernails scraping against a chalkboard for 1.5 working days, here are some other takeaways:
Angel network applications are all basically asking the same stuff, but there are slight variations from network to network that make it extremely time-consuming for a founder to complete.
It was really nice when a network provided a thorough overview of the process, fees, and what to expect at the very beginning. Most didn’t.
Applications suck.
Small wins are emotional lifelines. 🛟
This month, we closed 2 small deals, and we’re beyond pumped. I’m sure every founder who has found “product-market fit” has a journey that is littered with “stuff that didn’t work out,” and maybe it’s obvious to everyone else, but as my team and I live out the journey personally I’ve been shocked at how much willpower it takes to keep doing new stuff knowing that it probably won’t pan out as we expect. Every week we learn a little more, and that forces us to change our approach and try something new, but it’s tough. So securing small wins is invigorating for the whole team - it creates this ethos of “wow we found something that works!” and that’s enough to keep us going.
Magic trick: paying someone to do a thing forces you to make a call. 🪄
Our team has talked at length about one stupid survey at least 6 different times this quarter. And we never landed on exactly what we wanted it to look like. Maybe that’s due to my shortcomings at driving us to a decision (I’m growing!), but this week I figured out a cool trick to help. We recently started working with Clay Moss, an experienced UI/UX designer, to refresh our website (highly recommend). He’s been working with us at length over the last few weeks, and the next item in his hopper was this particular survey. Of course, we could have just had him design it 10 different ways and kick the can down the road again, but the bootstrapping mindset doesn’t look kindly on that approach. So we forced ourselves to set a meeting, take an hour, and (finally) make some decisions. And we did. Magic.
About Me
I cultivate flourishing.
I'm also the CEO of PitchFact, where we help angel networks conduct efficient and collaborative diligence. I'm a proud husband, aspiring father, and grateful friend. My love languages include brisket, bourbon, and espresso.
About PitchFact
PitchFact helps angel networks conduct efficient and collaborative diligence.
Learn more at pitchfact.com.