What Are Angle Investors?
Typically, angel investors are wealthy, high net-worth individuals who invest their money into early stage and emerging businesses. While angel capital can sometimes come from family and friends, most angel investors are entrepreneurs themselves. In addition to funding, they may also bring some business expertise to the table. Angel investors are different from venture capitalists that are funds that also invest in a portfolio of emerging businesses.
1. Make the Right Pitch
Your chances of connecting with the angel investor you need will be much better if you tailor your pitch. Investors, in general, need to understand your business, how it fulfills an unmet need, whether it has room to scale and have confidence in the management team. Your pitch should also have information on your business’ financials, competitive landscape, as well as industry and regulatory challenges. Remember, angel investors are putting in their money, so these fundamentals are even more crucial to them. Having said that, remember to keep the presentation and pitch professional, concise and comprehensive.
2. Look Close to Home
Many angel investors like to play an active role in the business they invest in, so they prefer to invest in businesses that are close to home. So starting your search for an angel investor in your local community could be a first step towards meeting the right investment fit. You can also start your research with an investor database, such as the one provided by CB Insights.Some colleges have angel investor communities that help support businesses owned by students, alumni or parents of students.
3. Take Every Opportunity to Network
In most cases, you need to be referred to an angel investor. So to find angel investors you need to get to know the right person (the one who can refer you to the angel investor you’re looking for), which means immersing yourself in your local business and social community. Focus on business owners as these are the people who might be or become angel investors themselves or know an angel investor. Join business and trade organizations and regularly attend the meetings. Joining civic and community organizations are also great for networking. Attend trade fairs and events. Get your face and your name out there and meet as many people as possible.
4. Realize That Many Angels Don’t Fly Solo
While there are some angel investors who invest entirely on their own, many operate as part of an informal network or syndicate where they can pool their resources and share the risks.
5. Use the Connection Services Available on the Internet
You may be able to hook up with an angel investor through one of the websites that provides entrepreneur and angel investor matching. If nothing else, you can at least get your business proposal before a wider audience. Here’s just a sampling to get you started:
Angel Capital Association (ACA): The largest professional development organization for angels in the world, ACA boasts over 15,000 member accredited angel investors and over 250 angel groups and accredited platforms, making this website a great resource for finding angel investors.Angel Investment Network: Angel Investment Network gets you access to over 300,000 angel investors. It allows you to create and publish your pitch on its platform, after which interested investors can contact you and complete a transaction.AngelList: Launched in 2010, AngelList has been a part of early funding for some big name companies such as Uber. Today, it works to connect startup founders with different types of investors, including angel investors.
The Bottom Line
Finding an angel investor is not a particularly easy task, but the effort will really pay off when you find the angel investor who is willing to invest in your business. Besides providing the capital your business needs, the advice and know-how of an angel investor can be key to shaping your company’s success.
title: “How To Find Angel Investors” ShowToc: true date: “2023-01-22” author: “Ramon Harris”
While an angel investor may seem like an ideal solution to your funding problems, the reality is more nuanced than that. Finding one (or more) suitable for your business can take a lot of time and effort, especially for sole proprietors who are seeking out opportunities in a competitive market. To help you better navigate your financing path, it’s important to learn what angel investors are, how to know if they’re right for your business, and the best ways to find them.
What Is an Angel Investor?
An angel investor is a high-net-worth individual willing to invest in a startup, often because they are personally familiar with the startup’s industry, see high growth potential, and value its business plan. In an email interview with The Balance, Charlotte Spokes, who raised approximately $122,000 for her dating platform Hellosolo, said that angel investors can offer money, mentorship, and access to resources in exchange for equity. “This ‘value-add’ can offer significant support to the startup and help fast-track its growth,” she said.
What Are Accredited Investors?
Angel investors who deal in more intricate transactions and certain securities offerings are known as “accredited investors,” a term used by the U.S. Securities and Exchange Commission (SEC) under Regulation D. One type of accredited investor as defined by the SEC is an individual who has earned more than $200,000 in the last two years or has a net worth of over $1 million, and is “financially sophisticated” enough to sustain the risk of loss.
Angel Investors vs. Venture Capitalists
While angel investors and venture capitalists (VCs) both have the same goal of investing money into businesses, there are some clear distinctions between the two, some of which are listed below.
Can You Truly Sell Your Business Idea?
A strong elevator pitch can give potential angel investors a short, snappy overview of your business and be enough to lure them in. But being able to show your industry savvy and sell yourself might be the keys to sealing the deal. “Investors want to make sure founders know their business concept and market trends inside out and can articulate it well,” Marc Snyderman, owner and president of Snyderman Law Group, told The Balance via email. Having attracted angel investors and invested in startups himself, Snyderman said, “Investors are always investing in the people behind the concept, not just the concept itself.”
Is an Angel Investor Right for You?
If you are having trouble managing cash flow for your day-to-day operations and struggling to grow your business at the desired pace, it may be a good time to consider getting an angel investor. “When it’s just you running a company, you have only yourself to answer to, but when you take on investors, you are legally answerable to them,” said Trey Taylor, founder of business coaching company Trinity Blue, in an email to The Balance. “This includes working to make sure the business plans you pursue are reasonably calculated to increase the enterprise value of the company.” However, if you believe an angel investor is right for you and your business, here’s how you can start your search.
Attend Networking Events
Attending in-person networking events can serve as an excellent opportunity to interact with potential investors and get an idea of what they are interested in. One of the best ways to meet angel investors is to attend events organized by local business and trade organizations, like the U.S. Chamber of Commerce. Trade shows can also provide a great avenue for interacting with high-net-worth individuals and established businesses in your target industry. However, just showing up at these networking events isn’t enough; you must be prepared to pitch your company and get angel investors interested. This is where having your elevator pitch ready can be beneficial.
Draw On Your Existing Network
As a sole proprietor, you don’t necessarily have to rely on large networking events to find angel investors. Starting within your existing social circle is often easier, as people in your current network are more likely to give you more relevant, personalized advice. They can also connect you with other experts who can guide you in the right direction. If you have friends in the finance industry, reach out to them as they are more likely to have colleagues or acquaintances in the investing sector. You can also contact local banks and loan providers that may have wealthy customers looking for new investment ideas. Finding existing connections like these can help you cut through the startup competition and gain investors’ attention more easily.
Use Online Resources
If you’d rather not attend in-person events, several virtual resources can connect you with interested angel investors. Here are a few options:
AngelList: AngelList provides a massive library of resources for startups and angel investors. You can find investors to connect with as well as benefit from an ample amount of free advice available on its startup blog. SeedInvest: SeedInvest is an equity crowdfunding platform that connects startups with angel investors. Using the platform, startups pitch their businesses and investors choose to fund what best suits their interests. Investor Hunt: This easy-to-navigate platform is great for sole proprietors looking to find a suitable angel investor quickly. You can instantly search through 40,000+ investors to contact and impress with your elevator pitch.
