How to find angel investors

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:

Industry experience

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.

Investing experience

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.

Financial stability

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.

Mentorship ability

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.

Social media

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.

Networking events

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.

Friends & family

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.

Online

There are numerous options when it comes to finding angel investors online. To start your search, it’s worth exploring the following:

AngelList

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.

Angel capital association

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

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

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.

UK Business Angels Association

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.

Angel Investment Network

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:

Get references

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.

Review case studies and experience

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.

Interview the investor

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.

How Swoop can help

If you’re an early-stage business looking to raise funds, Swoop has an array of services to help you get the funding you deserve, from SEIS, stress-free pitch deck creation and more.

Speak with an equity finance specialist by registering with Swoop today.