Stephanie Luebbe is the executive director for the Nebraska Angels. She joined the organization in early 2018. Stephanie joined the angels after a career at Hudl, Conagra Brands and Walmart, where she specialized in market development and merchandising. Since joining the angels, she’s elevated the organization’s operations and increased the number of active angel investors in Nebraska.
The Startup Collaborative is a proud partner to the Nebraska Angels and works alongside Stephanie to ensure that fellows who are seeking capital know the ins-and-outs of fundraising from angel investors.
Q: Stephanie, tell us about the Nebraska Angels.
A: The Nebraska Angels network was formally organized in 2006 to provide structure around angel investing in Nebraska, making it easier for startups to find investors and for angel investors to manage funding requests. Our mission is to provide high-quality investment opportunities to our members while building the entrepreneurial community. Over the last decade, our members have deployed over $27M in early-stage, high growth companies. Members are passionate about start-ups and helping entrepreneurs scale with the necessary capital. The Angels’ portfolio consists of forty-four companies, with two notable exits of EyeVerify and Flywheel.
Q: Give us the 101-version on what angel investment means.
A: Many entrepreneurs seek capital (other than their own funds) at some point during the life cycle of their business. Where capital is sourced often depends on the industry and maturity of the business. The various sources of capital include grants, friends & family, angel capital and venture capital. Angel investors will most often invest through convertible preferred stock or convertible notes.
Q: In our region, when do the Nebraska Angels like to invest in a company?
A: Entrepreneurs tend to seek angel investment when an injection of capital is necessary to take the company to the next level in terms of market penetration, customer acquisition and key hires to expand the team. Tangible metrics include a product that’s live in the market with some level of a customer base that is paying for the product and/or service. This can vary significantly by industry, however, for a SaaS business model we like to see monthly recurring revenue of +$20,000. Most Angel rounds are usually in the range of $250,000 to $3,000,000 for capital raised.
Q: As a startup, what are the key things you should do to prepare for fundraising?
A: Engaging our group early on in the process will allow for in-depth discussions and assessment of the most optimal fundraising path with our members and syndicate partners. Specific materials that are required for an application include a pitch deck, anticipated terms, cap table, historical financials and a Pro-forma of at least three years. Also, ensure you seek legal counsel that specializes in startup formations and financing transactions prior to pursuing investors.
Q: What questions should entrepreneurs anticipate from angel investors?
A: Early-stage investors will want to understand the journey of the company, starting with what motivated the idea for the business to how scalable your operations are. Rather than preparing the “perfect pitch” for investors, consider telling a story that others can relate to, peppered with data and metrics that make the investment opportunity appealing. Every entrepreneur and start-up faces challenges along the way, and angels will want to see how you can learn, lead and pivot through those times. Check out this list of questions as you assess and prepare for taking on outside capital.
Q: What is the entrepreneur’s process from the application on your site to securing funds?
A: The estimated length of the entire process is around 60 days from submitting an application to the collection of funds. A step-by-step guide of the process can be found here. If our members are not interested in funding a company, we try to reach that answer in a much shorter window as well as provide feedback to help founders with future fundraising efforts. Every angel investor approaches their decision-making process differently; our goal is to help streamline the process with centralized diligence efforts, organized meetings, etc.
Q: What are the top reasons an entrepreneur is not selected to present to the Nebraska Angels?
A: In most cases, the timing is too early to capture investor interest and founders are asked to come back once they’ve gained more traction in the market. Another limiting factor is the size of the attainable market and whether it can support growth that could eventually provide angels with a +10x return on their investment.
Q: What’s one more thing you’d like to add?
A: Raising capital is not easy and usually a lengthy process. The more you can learn and understand about taking on outside investors before actually doing so is highly encouraged. Take the time to apply a valuation to your company and prepare your presentation.