Over the past few months, I've had the opportunity to speak to groups about the difficulty in raising capital from angel investors. I always emphasize the need to establish a relationship with several angel investors before asking them to invest. This takes more time than many companies have to raise capital before going out of business. Therefore, most companies have to bootstrap for up to a year while establishing relationships with credible angels and angel groups.
There is a trend toward angel investors forming angel groups. I think this will help companies that qualify to raise capital from angels, but companies need to recognize the time it takes to go through the process of getting money from an angel group. I hope the formation of angel groups results in better access to capital for entrepreneurial companies.
But, it still takes more time than most entrepreneurial companies can imagine to raise capital from angels. I often advise early stage companies that they need to "raise capital to raise capital." Otherwise, the company can't stay in business long enough to develop the relationships with angel investors necessary to raise a serious amount of capital.