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Raising capital isn’t easy. Raising your first round of capital can easily be the most difficult, especially for those who haven’t raised with previous companies. For many founders, raising money can become a full-time job. It takes time to build the pitch, format spreadsheets, and then attend meetings upon meetings. This is, of course, on top of actually running your company. Sound exhausting? It can be. But for most founders, that’s how the game is played.

This guide should help if you’re struggling to find angel investors in Omaha or around Nebraska.  A word of caution, though, before we begin. Never lose focus on business development. Every hour spent hunting for investors is an hour you could’ve spent acquiring more business which makes finding investment a lot easier. The more traction you have, the more success you’ll have with investors.

If you have traction, monthly recovering revenue, and a clear acquisition channel identified then finding an investor to take you to the next step is a great idea. This article is written to help guide founders looking for investors in Omaha. This doesn’t mean that the strategies we show in this article can’t be applied to other cities, states, or even countries.

What is an Angel Investor?

An angel investor is a wealthy individual who invests in startups typically in the seed, Series A and Series B funding.

Wait, What is Seed or Series Funding?

Seed stage funding is generally considered to be your first official round of investment. It typically comes after the initial investment by the founder(s) and their friends or family. Series A funding would come after your Seed funding and is typically reserved for companies with clear products, marketings, and paths forward.

In Omaha, and around Nebraska, things work a bit different than on the coast. A Seed round of funding in Omaha might be as little as $50,000 and typically not more than $1.5 million. This can often be done with local accredited investors. In Nebraska, a series A is often over $1 million but less than $5 million. Investment rounds of this size typically require the involvement of regional and national investors.

What is an accredited investor and the requirements?

An accredited investor is an individual or business who can engage in securities that are not registered with the SEC.

Securities need to be registered with the SEC in order to be offered for investment. However, there are exemptions under Rule 506 of Regulation D. Accredited individuals can invest in opportunities like a startup if they meet certain criteria.

Accredited Investment Requirements

  • $200,000 in annual income for the past 2 years
  • $300,000 in annual joint income for the past 2 years
  • Net worth or joint net worth over $1,000,000
    • Primary residence does not count

Other unique exemptions for Accredited Investors

  • Trusts with total assets over $5,000,000
  • Any entity in which all of the equity owners are accredited investors.

When should you look for an Angel investor?

Once the founders are heavily invested and you’ve identified product-market fit, you’re probably ready for Angel investors.

Here’s our checklist for when you should raise money:

  • Found a potential acquisition strategy and channel
  • Acquiring customers faster than you can deliver product or features
  • Have a solid customer foundation with little churn
  • Achieved product-market fit
  • You need capital for a large purchase i.e office space/building

Remember, raising money can also be framed as selling pieces of your company at a discount to a future value. That is, your plan is for your company to be worth more someday and you’re selling it now for less money. You should raise capital when you need capital, but not before and only if the need is beyond your capacity. You want to keep as much of your company as possible for as long as possible, don’t be too eager to give it away.

Essentially, the only reason you should get investment money is to scale your business to the next point faster. For example, if you’ve proven to have a low customer acquisition cost within a certain channel and it has a healthy profit margin, then it’s a great idea to raise capital to capitalize on the opportunity. Capital should help you turn the flywheel faster, not build the flywheel.

Another reason to raise capital is if you’re adding revenue at a rapid rate and you can’t hire fast enough. There are a few options, either slow down or raise capital to buy all the extra infrastructure you need to support this rapid growth. If you don’t then your company will spiral out of control and crash. Too much too fast will break things. But don’t overlook the opportunity to slow down and finance with cash from sales.

“It may seem premature, but you need to be thinking of your exit from the moment you accept capital, because at that moment, you’ve made an explicit agreement with an investor that he or she will eventually be able to gain liquidity.” – Neil Blumenthal

Only take money when you’re on the offense.

Seed capital isn’t typically enough money to pay the founders a salary. If you’re looking for seed capital to extend your runway, you’re headed straight for burned bridges. If you’re a brand new founder with little to no experience then don’t get funding until you’ve completed the following checklist.

Related: Omaha Startup Press for 2019

Checklist for Startups Raising Money

Before you go out and apply for investment it’s best that you are prepared. Too many first time founders attempt to raise capital when they’re not ready. Here is an investor checklist for new startup founders trying to raise funding:

  • Pitch Deck (Keep it under 20 slides)
  • Cap Table
  • Team
  • Key Performance Indicators (KPI’s)
  • Exit Strategy
  • Type of funding (Equity, Convertible Notes, Venture Debt, etc)
  • Acquisition Strategy

Helpful KPI’s for raising money

Startups that track these KPI’s will have a significantly easier time securing capital. Even better, you’ll get genuine feedback from investors on how to improve certain KPI’s.

  • Customer Acquisition Cost
  • Cost Per Lead
  • Daily Active Users
  • Weekly Active Users
  • Monthly Active Users
  • Customer Lifetime Value
  • Operating Margin
  • Burn Rate
  • Churn

Apply to Angel Groups in Omaha

One of the best ways to secure capital for your early-stage startup is through Angel Groups.

Nebraska Angels

Nebraska Angels is a group of 60 active angel investors. They’ve invested over 26 million into startups. The angel group also has great resources throughout their site to help prepare founders for raising capital. Nebraska Angels typically invest in startups that need funding between $100,000 to $1,000,000. The funding should provide 12 to 24 months of runway. Check out Nebraska Angels “before applying” page to get more information.

Treetop Ventures

Treetop Ventures has a track record of companies of great early investments including a top Omaha startup Sojern. Sojern has brought investment players now alongside Treetop Ventures like the $7.5 billion powerhouse Northwest Venture Partners. One of the best things about Treetop is its transparency. They show you their bad bets, missed bets, and overall success.

Related: Why People Hate Offices and Don’t Like Their Jobs

Prairie Ventures

Prairie Ventures is a diverse investment fund based in Omaha with interests in a number of verticals. The fund has a few success exits already, and a number of unique equity investments like United Republic Bank, which was acquired. They’ve also found a number of successes in healthcare. You can read more about their investment criteria on their website here.

Invest Nebraska

Invest Nebraska is active in the Omaha market, and across the state. Their mission is to build a better future by investing in companies, developing high growth infrastructure, and attracting out-of-state capital to Nebraska. They’ve invested in over 50 companies including some of Omaha’s rising early-stage startups. Their portfolio includes Omaha Leverage RX, TAGG, OpsCompass, and Crumb. You can read all about their investment criteria, including FAQ’s and what to expect, on their website.

Find Accredited Angel Investors using LinkedIn Sales Navigator

Sometimes, the best route to raising early money is working directly with individual accredited investors. Raising new capital should be viewed like prospecting new business. If you’re unable to get new business then there’s a high chance that you will not be able to close a funding round. The same sales principles will be applied to prospecting accredited investors. The prospecting channel that we will use will be LinkedIn. In order to do this a subscription to Sales Navigator will be needed. Luckily, there is a 30-day free trial so this is the perfect use of building out your investor network. Here is our step by step guide:

Step 1: Identify your search criteria

The most important step in finding investors is knowing who to look for. Angel Investors are typically very wealthy individuals, so connecting with folks who aren’t wealthy is a waste of time for this specific exercise. Before you proceed, you should write down as much information as possible about the ideal person you’re trying to target. Build a persona of your ideal investor.

Here is an example:

LocationOmaha, Nebraska
TitleOwner
IndustryTelecommunications
Previous ExperienceManaging Director
Key WordsInvestor, Angel, Marketing

Let’s say I run a telecommunications startup. Then I would want the person or firm investing in me to also have experience inside telecommunications. This would increase the value of the investment tremendously. Treat the investor as a strategic partner and not so much as someone who gives you money. The right investor should provide you introductions, guidance, and help you solve or prevent problems in your space before they become critical.

Step 2: Find Individuals in your Criteria with Sales Navigator

In Sales Navigator, click on search by keyword or phrase. For the first try, search by the keyword “Angel Investor” and then filter by location “Omaha Nebraska.”

Here are the results:

There are a total of 262 results for people who live in Omaha and have the word Angel Investor. Now, this doesn’t mean that every person in that criteria is an Angel Investor, but this is a great start.

When saving these leads, always start off with those who have posted on their LinkedIn within the last 30 days. Those are the most responsive people in the industry. Here is a checklist of prioritizing which potential angel investors to prioritize.

  1. Shared Connections
  2. Years in Role and Company
  3. Activity on LinkedIn

The next step of the guide is to save potential angel investor profiles to your “lead list”.

Step 3: Save Angel Investor Profiles to Lead List

If you haven’t created a lead list then you should do that now. It takes less than two seconds. Just click on the save button next to the person’s profile.

Step 4: Contact shared connections

Once you’ve successfully saved everyone you want to reach out to it’s time to go through the list and contact the shared connections. The reason you want to start off with shared contacts first is that they’re the ones who most likely have had some sort of contact with the angel investor. A warm introduction almost always works better than a cold intro.

Step 5: Cold Connections

Maybe your shared connections don’t actually know a potential investor well and can’t provide you with an intro. If this is the case, then I recommend reaching out cold. If you don’t ask, it’s always a “no”. Also, remember you have about 50 words to get your point across, so take the time to write and rewrite your message. This cold intro message matters. It should be brief, practical, straight forward, and actionable. Here’s an example of a cold message, or email to use.

Hey {FirstName}! My name is {name} and I’m the Founder of {Company}. We’re currently raising capital for an Angel round and I’m specifically looking for potential investors with experience in the {industry or market you share}. Do you have an interest in Angel opportunities?  Below, you’ll find a link to your pitch deck and website. If you’d like to explore things in more detail, please let me know and we’ll schedule a call or meeting.

{Link to pitch deck via something like Dropbox}
{Link to website}

An important note, if you have investors already that you think this person may know you should also include this in your message. For example, “we’re raising $250k and we’ve closed $100k with Amy Smith and Sally Sue.”

The more personalized the connection request and or the email the higher the chance that they will accept and respond.

At the end of the day, it is a numbers game and the more you practice, test, and optimize the better the results you’ll get. There’s nothing special about getting meetings whether its for sales or raising capital. The prospecting, pitch, and the close process is very similar.

Step 6: Follow-up

People are busy, especially if they run their own company or advise others. Just like sales, follow-ups are extremely critical for success. Here’s a list of reasons why someone didn’t respond.

  • Email got buried in email inbox
  • Accidentally deleted email
  • Forgot to respond back to you
  • Email received wasn’t compelling enough

When you follow up, always bring new information or value. Never simply “circle back” on a message. Follow up with a new pitch piece, an announcement of a new investor, or inclusion of additional information that other investors have asked you to share. For example, “Hi, John, other investors have been asking me to include more detail on our cap table so I wanted to be sure you had that as well.”

Use Angellist to find active Angel Investors in Omaha

Angellist is a startups best friend. It’s a hub where you can go to find competitors, jobs, employees, investors, and potential prospects. We will be focusing on finding investors through Angellist. You can find a link to Omaha’s investor page here. You may want to find some of these investors on LinkedIn and work the investor prospecting process above.

Investors out of state interested in Omaha

There are many reasons why you should go outside of the city to look for capital. The Omaha investment community is not nearly as robust or mature as other larger markets. Local investors are great, if not ideal, for early rounds but you may need to pursue other options. If your business venture has a valuable model and a clear customer acquisition strategy there is no reason to avoid investors from outside the city or even the state. Once the investment is successfully secured, you could always explore state-sponsored grant options as a way to extend your runway.

Nebraska Innovation Fund Prototype Grants

Another overlooked way to get funding is through grants. The Nebraska Prototype Grant matches investments up to $150,000. The payout is done in disbursements so it’s not a lump sum of cash. The funds can only be used to cover certain eligible categories such as employees. For more information on the Nebraska Prototype fund or if you want to apply then you can go here.

Conclusion

In our guide to finding angel investors in Omaha, we covered when you should raise capital, what angel investors are, when you should raise capital, and some investor prospecting strategies that will help you secure funding or at least find new business in the process! Check out our office spaces in Omaha for teams of 2-20 if you’re ready to have a space to call your own. Populus is built for growing companies like yours.

Related: List of Coworking Spaces in Omaha

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