From avoiding over-raising to embracing exponential thinking, EisnerAmper’s Alan Wink shares five must-know insights for startup founders preparing to pitch.
In the high-stakes world of early-stage investing, angel investors must bet big on startups with the potential to return even bigger. But not every pitch makes the cut, and often, it’s the founders’ approach that determines their fate.
In a recent interview with Kesav Dama, published on The American Bazaar, angel investor Alan Wink shared insights into how experienced investors evaluate startups, spot red flags, and identify breakout potential. As Managing Director of Capital Markets at EisnerAmper, Wink has reviewed hundreds of pitches.
Here are five key takeaways every entrepreneur should know before stepping into the room with investors:
1. Raise what you need, not what you want
One of the most common mistakes founders make is raising too much capital too early, leading to unnecessary dilution. For example, giving up 10% for $500,000 could mean sacrificing $10 million in future value if the startup grows to a $100 million company. A clear, milestone-driven spend plan is crucial to justifying any raise.
“I don’t think very many founders understand the return dynamics that VCs need to see before they write a check,” Wink says.
2. Investors rely on outliers, be one
The math behind angel and venture investing is unforgiving: roughly a third of investments fail entirely, another third barely return capital, and only the remaining third deliver meaningful returns.
“When you see a fund returning 10x, it’s basically because of that one-third of deals that delivered those outsized returns,” Wink notes.
Angels are on the lookout for startups that can deliver 10 to 20 times of returns to offset the many that won’t. Founders should think in terms of exponential — not incremental — value.
3. Don’t overpay yourself
“Too much capital going to management salaries,” Wink says. Early-stage investors view inflated founder salaries as a major red flag. Instead, founders are expected to stay hungry and motivated by long-term equity upside — not short-term cash.
4. Stay grounded with your projections
Credibility matters, especially in a pitch. Overly optimistic revenue projections, particularly in small markets, often backfire. Claiming $300 million in revenue in a $350 million total market, for example, signals a lack of understanding of market dynamics and scale. Angels expect grounded, data-driven forecasts.
“Founders need to have a sense of realism: you’re not going to grab most of the market right away. It takes time,” Wink says.
5. The best founders have lived the problem
Startups built by founders with deep domain knowledge — those who’ve experienced the problem firsthand — tend to outperform. Add in a relentless work ethic and a willingness to sacrifice for long-term gains, and you’ve got a winning formula.
“When the founder [has come] up with the idea through their day job. If they identified a gap in the market based on something they experienced in their own career or company, those startups tend to be more successful,” Wink notes, adding, “they [have seen] the problem firsthand and realized that many other companies likely face the same issue — that’s huge.”
Bonus Insight: Angel groups offer more than capital
For founders seeking more than just a check, angel groups can provide a valuable support network. These groups typically meet monthly, with a handful of startups pitching in each session. If there’s interest, a deal team digs into due diligence, and experienced members often serve as informal mentors or “champions.” Deal sizes typically range from $200,000 to $600,000, with several investors pooling resources.