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NGHow to find angel investors
If you’re looking for investment in your business, whether you’re just starting out or planning to expand, an angel investor is one potential option to explore.
If you’re looking for investment in your business, whether you’re just starting out or planning to expand, an angel investor is one potential option to explore.
Beyond simply investing in your business, angel investors can also bring a wealth of experience that could prove invaluable to your business.
This guide explains everything you need to know about finding angel investors for your business.
Angel investors, or business angels as they are also called, are high-net worth individuals who are looking to invest in startup or early-stage businesses. In return for their investment, they receive a share of the company’s equity.
Some angel investors will choose to invest alone, while others will be part of an angel syndicate (a group of angel investors).
An angel investor usually has experience in business and will often have skills, knowledge and networks that can add value to your business and help it succeed.
Primarily, you want to find an angel investor with the right amount of cash to invest. But there are also a number of other important factors you need to consider. These include:
Firstly, you’ll want your angel investor to have experience in the specific industry you work in. This means they’ll understand the challenges you’re likely to face and will hopefully have the skills required to take your business from strength to strength, as well as fill in the gaps you have in your own skillset.
Finding a business angel who has invested in businesses before, rather than choosing a first-time investor, is another important consideration. This means they’ll have a better understanding of how the process works and might be able to offer more valuable expertise. Take a look at their previous investments and how they worked out to help you establish what’s best for you.
You’ll also want your angel investor to be a high-net worth individual who can easily offer you the funding you need. It’s important to know that investing this money won’t cause them any financial difficulty in the future as this can put unnecessary stress on your business.
What’s more, it can be worth checking whether they are likely to have funds available for future rounds if things go well as this will give you longer-term support.
An angel investor should also be able to act as an advisor, helping to guide you through the world of starting up and running a business and offering support in times of need. Just be aware that not all investors will be happy to offer advice, so it’s worth checking this as part of your search.
Once you know what you’re looking for, you need to know where to find business angels. Take a look at the below to get started.
Social media can be your friend when it comes to looking for angel investors. Twitter, in particular, can be a great way to connect with potential investors. To get started, you’ll need to explain what your business is hoping to achieve and talk about the current journey you’re on to build your company. Doing this can help you to gain a following on social media which, in turn, can make it easier to connect with investors.
Another great option is to attend networking events where you’re likely to meet people in your industry and hopefully people with money to invest. Look around your local area and nearby cities that host big events to see what’s most suitable. Local startup and entrepreneur community events, pitching events and industry talks can be good options.
You might also be able to get investment from close friends or family members. If they have a lump sum of cash they are willing to invest in your business, this can save you a lot of time and effort. However, remember that if things go wrong, your relationship can quickly turn sour, so it’s crucial that all parties are aware of the risks and know where they stand.
There are numerous options when it comes to finding angel investors online. To start your search, it’s worth exploring the following:
AngelList is a popular website for startups to look for investors. It mostly aims to serve tech startups and many businesses also use it to hire staff.
To get listed in the directory, you’ll need to build a company profile and a personal profile, which will help you to gain exposure.
The Angel Capital Association is a group of more than 15,000 accredited angel investors who have entrepreneurial experience and invest more than $650 million in early stage capital each year.
Gust is another angel investor network and has a directory of thousands of different startups and accredited investors. Once you’ve created a profile, you’ll be able to find out how much you can raise, which investors to target and how to improve your venture.
ACF Investors is a venture capital firm that manages the Angel CoFund. This works alongside syndicates of angel investors to help early stage, high-growth UK businesses.
The UK Business Angels Association (UKBAA) is a UK-based angel and early-stage investment organisation with more than 650 members who invest more than £2.3 billion a year.
The Angel Investment Network brings together businesses looking for investment and investors with the capital, contacts and knowledge to help them succeed. It has more than 300,000 angel investors worldwide. To sign up, you’ll need to create a pitch and this will then be listed on the site for prospective investors to evaluate.
Once you’ve carried out some initial research, made some connections and found some potential angel investors to give you the required funding, you’ll need to work out which investor is the best choice for you. The steps below can help you with this:
Some startups prefer to only work with accredited investors as they know they’ll be working with someone with previous investment experience. But whether you choose to go down this route, or look for an individual investor, it’s crucial that you get suitable references so that you can be confident of success.
It’s important to find out about a potential business angel’s past investments, including who they worked with and how successful their investment was. Doing so can help you to understand how they approach the process and how they are likely to work with you in the future.
It can take up to six months to find the right investor, so it’s important to be as thorough as possible when doing your research and assessing your options.
You should also treat any calls you have with potential investors as an interview. Make sure you have a list of questions to ask each time and take notes during the calls so that you can easily refer back to what’s been said.
It’s important that your investor can buy into your vision and you’ll need to discuss whether they want to invest and act as a silent partner, or whether they are happy to be more involved and act as an advisor based on their previous experience.
As part of the selection process, it’s also good to talk about the goals you both have to see if you are aligned. This should include the amount of money needed and the investment timeframe – your angel will want to have a potential exit strategy so it’s important that you discuss this early on.
The disadvantages of angel investing to an entrepreneur include:
The difference between an angel investor and a venture capitalist primarily lies in their funding sources, investment amounts, and involvement with the businesses they invest in.
Angel investors are typically high-net-worth individuals who invest their personal funds into early-stage startups. They often invest smaller amounts compared to venture capitalists and may be motivated by personal interest in the industry, the potential for high returns, or a desire to support entrepreneurship.
Venture capitalists, on the other hand, manage funds from multiple investors, including institutions and high-net-worth individuals. They invest larger sums of money into companies that have moved beyond the startup phase and show high growth potential. Venture capitalists are more likely to be involved in the strategic direction of the company, often taking board seats and providing resources, guidance, and industry connections to help the business scale.
While both angel investors and venture capitalists provide funding to growing businesses, they differ in the scale of their investments, the source of their funds, and the level of involvement in the companies they support.
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