A Killer Guide to combining an Angel Army with Stacked Notes
A Killer Guide to combining an Angel Army with Stacked Notes
Use this strategy to really jump start an early stage fundraise
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A Killer Guide to combining an Angel Army with Stacked Notes
Use this strategy to really jump start an early stage fundraise
Out of everything I've produced, I’m most known for my content on Calendar Density. It’s a simple way of describing the most optimal setup of a high-performing fundraise.
After Calendar Density, the next two most popular concepts I covered in my work have been the Angel Army and Stacked Notes. My essay on raising an Angel Army is one of our most-viewed of all time and on my podcast Funded, Sam Corcos from Levels outlined his masterful use of note stacking in our most popular episode ever.
While Stacked Notes and Angel Army are separate fundraising strategies that can be used independently, they are increasingly being launched in tandem. How? That’s what this essay is about.
To start, let’s review the concepts…
Angel Army is a focused strategy that targets the addition of angels to a cap table for their strategic value as opposed to their operational capital. This strategy emphasizes the benefits that even tiny checks like $5k can have on future abilities to attract talent, close business, and raise capital. Until recently, adding small checks was not as common because of the distaste for managing larger cap tables. Tools like Carta, Clerky, and others have relieved the administrative burden of collecting small checks thus making way for Angel Army strategies.
Stacked Notes refers to a strategy of raising successive non-equity rounds (convertible notes or SAFEs) with higher valuation caps. The power of Stacked Notes comes from the scarcity, urgency, and momentum each note with limited capacity adds to a fundraising process. This strategy was uncommon as recently as two years ago when there was much more power in the hands of investors. With that dynamic, investors often rejected any approaches to fundraising that felt abnormal. In the last couple of years though, a few trailblazing entrepreneurs have executed very visible stacked note strategies. When Sam Corcos ran this process, he drove a ton of excitement around his deal which landed some high profile angels as well as A16Z as an eventual lead investor. The Levels fundraise as covered in Funded helped make the strategy much more commonplace and accepted in the investor community. (Disclaimer: while I love the stacked notes strategy, I’ve also written about the dangers of stacking post-money SAFEs)
Each of those two strategies on their own are valuable for different reasons, but the combination has a very Captain Planet effect where the combination is greater than the sum of the parts.
With our powers combined…
It’s a match made in heaven, and the process of joining the two is fairly straightforward.
You start with the simple Angel Army strategy and simply add the dynamic of multiple follow-on tranches that have limited capacity.
(continue to learn how to execute this strategy)
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