Angel investors are some of the best people you should get to invest in your business. However, sometimes we are not sure how to identify angel investors and how to find them. If you are currently in search of one, read this article to completion.
Who Are Angel Investors?
Angel investors are wealthy and experienced people or executives who put their time and money into fast-growing companies in exchange for shares. These are typically individuals who have built up networks, expertise, and industry knowledge.
The majority of them are also business owners who have experienced the highs and lows of running a company, making their counsel priceless.
Therefore, when looking for an angel investor, you are looking for a person who is knowledgeable in your industry and has some experience working with startup companies. Such persons can be mentors too.
Who Can Be An Angel Investor?
Although many angel investors are accredited, one does not need to be accredited to be an angel investor. You can be an angel investor if you fit into the following categories;
- You have earned at least $200,000 or $300,000 per year for the previous two years, and you must anticipate earning that sum again.
- possess a net worth greater than $1 million, either individually or jointly with a spouse excluding the value of the individual’s primary residence.
Is it Hard to Find Angel Investors?
Finding the right investors is frequently a longer and more difficult process than you might expect. It takes time to vet angels and form relationships with them. However, it is still very possible to do it in a short while if you have the right strategy.
So, even if you’re not quite ready to seek funding, it’s never too early to start networking right away.
How to Find Angel Investors
It is not very easy to find and convince people to invest in your business. However, the following steps below will go a long way in helping you.
Take Advantage of LinkedIn
Create two lists to start with: one of angel investors with experience in the area you’re targeting or who are well-connected in the industry, and the other of people you know that can introduce you to angel investors.
You can meet all these people on Linkedin. People who fall within the both categories are the people you should aim for.
Be Very Friendly
Most seed-stage companies aren’t ready to pitch a top investor or even meet for the first time. You usually only get one shot with these people. You risk being forced into conversations before you’re ready if you don’t have traction with customers and a story that has been refined through dozens of pitches.
Instead, start by contacting people you’ve previously worked with or know personally. If you don’t have anyone like that on either list, look for people who are connected to insiders and ask to meet with them.
Join groups like Startup Grind, read a lot, and participate in online discussions. Events can be a great resource, but choose which ones to attend based on who will be there and who will be speaking. Continue with the intention of meeting those people.
You’ll want to network with other entrepreneurs. Don’t worry about someone stealing your idea because there’s so much more to building a successful startup.
Share Your Ideas
Never use a meeting to solicit funds. Instead, use the time to share your concept, business plan, and current progress. Solicit any and all advice you can. Your goal should be to attract someone’s interest in what you’re doing and secure an agreement to keep in touch.
Everyone understands that you require funds, but few investors will never write a check based solely on an initial meeting.
Places Where You Can Find the Right Angel Investors Online
Here are some platforms online where you can find the right angel investors for your business;
To locate angel investors, you don’t just have to stick with investor-specific venues. In order to meet your potential future investor, social media can be a very good resource. Particularly on Twitter, angel investors and business founders are frequently connected.
The website AngelList is a place where entrepreneurs may hunt for employees as well as investors to partner with for funding. It works well as a trustworthy tool with great industry reach because its main goal is to assist IT businesses.
To be listed in the directory, you can create both a company profile and a personal profile. This will put your startup in a good position to get investors, get some visibility, and let angel investors find you as well.
Tech Coast Angels
Tech Coast Angels is a well-known angel investment firm with a network that stretches from the Central Coast to San Diego. They have over 400 investors and help startups with mentoring, knowledge, connections, and business development. They provide these services to startups in industries such as life sciences, biotechnology, software, and information technology.
Their website provides entrepreneurs with information in the form of blog articles and other resources. These resources include information on what angel investors are searching for, so even if Tech Coast Angels isn’t the right fit for you, their resources may be.
Their social media presence is centered on Facebook and Twitter, with the latter providing regular updates that can be useful when learning more about this investment.
Gust is yet another reliable network for authorized investors and businesses, with a database of thousands of different startups. These directories help to speed up the verification process because these investors are already extremely qualified to be featured. However, before engaging with any investors, you should conduct your own research.
You can also work with Gust directly. They can advise you on the best course of action for obtaining funding.
Life Science Angels
This is a leading angel investment group that focuses on biotechnology, pharmaceuticals, medical devices, and diagnostics. Most of the angel investors you will find in this group are senior executives or founders of healthcare companies.
When you visit their website, you can apply for funding and get application tips, which can be very useful in reducing the number of errors on your application.
Angel Investment Network
The Angel Investment Network is a platform based in the United States that connects startups and angel investors. With 285,542 angel investors available to connect with in their directory, you have access to investors all over the world.
After registering, you can create a pitch in the platform and publish it live for investors to see. Investors can find your pitch and contact you directly, reducing the amount of outreach required. This is an excellent additional option for expanding your reach.
Golden Seeds LLC
Golden Seeds LLC is a one-of-a-kind early-stage investment firm that specializes in providing capital to startups founded or run by women. Their angel investors primarily fund software, technology, consumer goods, and life sciences.
Every month, new posts are added to their website’s blog, allowing you to learn more about the investors and those they fund. The Golden Seeds application fee is $50, and the process includes multiple pitch presentations.
It is a popular firm with over 275 investors and have attracted 2,200 Facebook and Twitter followers. The regular updates on both of these accounts can help you learn more about the companies in which they invest.
Angel Capital Association
The Angel Capital Association is a network of accredited angel investors with entrepreneurial experience and high net worth who work together to lead early seed angel investment rounds. Participating in ACA is simple. They provide direct access to a comprehensive list of potential investors.
This platform has over 14,000 angel investors, and it is a close-knit community that makes networking for future partnerships even easier.
Angel Forum is a company that connects startups and investors with a community in which they can get help with angel round funding. This resource will not expose you to inexperienced angels because all investors here are seasoned professionals with years of experience.
Because Angel Forum operates in both Canada and the United States, your startup will have access to a large network.
FundersClub accepts approximately 2% of all applications received. However, they evaluate every startup, so even if they do not receive funding, they can learn from the experience.
Their application is available online, but they prefer companies to network their way in for example, by speaking with one of their portfolio companies to get a warm introduction. This platform helps startups not only by investing in them, but also by giving them access to their network, community, and resources.
What Angel Investors Want to Know Before Investing in a Startup Business
These people; Angel investors know the high risks involved in starting up a business. Therefore, before they put their funds into any startup firm, they have to feel confident that the potential rewards from the investments are worth the risks involved.
Here are some of the major information most angel investors seek to know before getting involved with investments;
The Strength of the Management Team
Investors will want to know the skills, drive, experience, and temperament the team posses to grow the business.
Therefore, it is very good to be prepared for and expect questions like who the founders and key team members are, what relevant domain experience the team has, what key additions to the team are needed in the short term, why the team is much capable of executing the company’s business plan, how many employees the company has, what motivates the founders, and how the team plans to scale in the future.
How Big the Market Opportunity is
Mostly, angel investors are looking for businesses that can scale and become meaningful, so don’t present small ideas.
What Positive Early Traction the Company Has Achieved
Investors will look for signs of early traction, such as the creation of a beta or minimally viable product, initial or pilot customers, strategic partnerships, customer testimonials, and admission into competitive programs.
How Passionate Founders Are
Investors look for passionate and determined founders who are committed to growing the business and facing challenges.
Terms and Valuation of the Financing Round
Be prepared to answer questions about the financing round, such as how much is being raised, how much is already committed by investors, are any prior investors participating in the round? is there a well-known investor leading the round? and is there a minimum amount of capital being raised before a closing occurs? Valuation is an important issue for investors, and convertible instruments such as SAFs can help bridge the valuation gap.
What Ways the Company Intends to Market its Products or Services
The company must have a well-thought-out marketing plan to attract customers, such as who is their target market, how to approach them, how to use social media, content marketing, and third-party distribution channels.
The Company’s Financial Projections
Investors want to invest in a company that can become an exciting business and grow significantly. Therefore, it is important to express the key assumptions and convince them that they are reasonable.
How Their Investment Capitals will be Used
Investors want to understand how their capital will be invested and burn, as well as assess the fundraising plans and estimate of costs.
How Great the Company’s Products Are
Entrepreneurs must articulate their product or service and answer questions such as why users care, major product milestones, key features that make them different, what lessons have been learnt from early versions, and how often they plan to update it.
The Potential Risks Involved
Investors want to know about the risks in a business plan and how to mitigate them. Startups that can demonstrate that they have reduced or eliminated product, technology, sales, or market risks will have an advantage when it comes to raising funds.
Tips For Companies Seeking Angel Investors
If you are an entrepreneur seeking for angel investors, here are some tips you should follow;
- Make sure you have done your part in researching about the competitors of the business and know the types of questions that will be asked regards that.
- Go for investors that have invested in businesses at your location. These investors are usually attracted to businesses close to them.
- Also, target angel investors who invest in your field.
- Show the investor that there is an opportunity for a big exit.
- Make sure you do a product demonstration and you have a well produced video prepared for them.
- Prepare a very good investor pitch or about 15 to 20 pages.
- Practice your pitch properly before meeting with the investors.
- Be prepared for flexibility, you may have meetings through zoom or other video platforms.
As stated before, it may not be very easy to get an Angel investor. However, if you have a very good strategy, you will most likely find one. By following the tips, and suggestions given in this page, you may get your success story in this regard.
Read about more ways to get funding for your business here.