📰 Today's topic: Your founders don’t know who you know

If there are six degrees of separation between people, one of the best value-adds an angel investor can provide is to turn that six to zero. Said another way, you probably know someone who can help your founders accomplish their goals. They just don’t know that you know that person. Let’s fix that.

The pharmacy intro that almost didn’t happen

We recently had a portfolio company who was looking for a way to sell into pharmacies. We’d sent out multiple requests to our network for introductions, but it wasn’t until Elizabeth Yin mentioned their need on a call with Angel Squad members that the right person heard it and was able to make a connection.

The introduction happened because the right person heard the right thing at the right time. We’re always proud when we can leverage the incredible Angel Squad network to help our portfolio. However, a lot of these connections tend to come down to timing and luck. We think there’s a better way.

Why the ask rarely reaches the right person

The default approach is that a founder sends out a request to their network and hopes someone relevant sees it. We have a channel in our Angel Squad community built for exactly this purpose.

However, we recognize most people aren’t checking this channel every day. And we don’t want to email 2,500 members every time a founder needs a customer intro because we know for most of you the ask isn’t relevant.

We’re building an AI agent that can draft outreach to members who work in a given industry, with a person reviewing the list before sending it out. That will help us catch the obvious matches.

But it won’t help us find the member who works in fintech but their college roommate runs a pharmacy chain. That kind of connection lives in your head until you put it somewhere a founder can find it.

The importance of writing down who you know

Founders can’t ask for intros they don’t know exist. The responsibility lies with the investor.

As an angel investor writing small checks, here’s what we recommend you do:

• Send a short “who I know” note after you invest. List the industries you’ve worked in, the kinds of people you can reach (buyers, operators, other investors, etc.), and any markets where you feel you have unique access. For example, if you have a brother-in-law that works in hospital procurement, he belongs on the list.

• Refresh this list once a year. People change jobs, your network expands, and therefore so does your reach.

Keep the list brief. Names, titles, companies, and industries should suffice. You want a founder to be able to skim it in thirty seconds and know whether or not to reach out.

Share your list proactively

As I recently shared, I send a note about folks in my network looking for jobs to all the founders in my portfolio. Just a quick blurb about the person, BCC’d to all of them.

When they receive it, the founders can reach out to the candidate directly. No need to ask for an intro or check a channel. The process is easy for everyone.

We recommend a similar approach for sharing connections. Whenever you meet someone who you believe could be useful to your portfolio, add them to your list and then re-share it with your network, and give them permission to reach out directly. Doing this once a month or once a quarter is plenty.

Making connections is the job of an angel investor

As an angel investor, your value to your portfolio companies doesn’t come from the dollars you can invest, but the introductions you can make. One well-timed introduction to a customer, a prospective hire, or another investor could be the difference between a company getting to the next round, which is how small checks turn into 10x outcomes.

Founders remember the angel who made a valuable introduction. They also tell their friends who are raising about them. In other words, introductions are one of the best ways to grow your reputation.

TL;DR

Your network only helps founders if they can see it. Write it down, send it out after you invest, and push useful connections to your founders before they even ask. That’s all it takes to be a value-add investor.

– Brian from Angel Squad

📕 Startup term you should know

Ever heard of Gross Logo Churn?

The percentage of customers who cancel their subscriptions in a given period, excluding any revenue impact. This metric focuses purely on customer retention at the logo level.

My insider scoop: For angel investors, gross logo churn is especially important for SMB-focused companies where customer success is harder to scale. Patrick Campbell observes that "annual gross logo churn above 20% for SMB SaaS indicates fundamental product or market issues." Enterprise companies should achieve gross logo churn under 10% annually.

Overheard in SF…probably

“We're not late to AI, we're deliberately second.”