How do you find angel investors? How do you get angel investors to invest in your startup? Don’t worry, founders. We’ve got you covered.
Finding angel investors isn’t like finding clams on the beach; the search ismore similar to finding the pearl. Here’s how to find angel investors that willbe most likely to want to invest in your business.
Your chances of connecting with the angel investor you need will be much better if you keep this profile of the “typical” angel investor in mind. According to Ralph Kroman of WeirFoulds LLP, the typical angel investor:
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Has an income that exceeds $100,000
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Is 40 to 60 years old
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Has a net worth in excess of $1,000,000
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Has previous successful entrepreneurial experience
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Expects to hold on the investment for up to five to seven years (although some angels wish to “cash out” after only a few years)
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Enjoys advising the entrepreneur and likes to be part of the action
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Invests up to $150,000 but may participate in a syndicate of other angel investors bringing the total investment to multiples of individual investments
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Refers deals to other private investors even if the angel has chosen not to invest
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Likes to invest in an industry with which the angel is familiar
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Sources deals through referrals
Angel investors look for companies with growth and export potential says Allan Riding, an expert on angel investing and professor at Carleton University. They understand that it may take several years before their investment will pay off – although they also expect to be well compensated for their risk.
Being referred to is probably the best way to find angel investors, even if it’s one of the harder ones. While angel networks and groups are an efficient way to get in touch, they are also available to everyone else, meaning angel investors are blasted with pitches, questions, and proposals left and right.
They are far more likely to listen to you if you have been referred by someone they trust, know, or have had business dealings with in the past. It’s a rule of thumb: warm connection is always an advantage when looking for financing as investors are more willing to invest in people they know rather than in those they don’t.
Referrals are closely related to the next point:
Finding angel investors directly is tough because some of them tend to keep their profession for themselves in order to avoid constant hassling. It’s worth asking your industry peers (especially if they have previous experience with angels or raising money) about advice, process, and finally – a name or two.
But there’s far more to networking than simply reaching out and meeting more people. To maximize your chances, you need to be smart and search for “hidden” details.
Here’s what I mean by it. How to find angel investors online can be solved as easily as searching for businesses similar to yours that have been sold recently (or scored major funding). You can reach out to the now rich founder and tap into their experience for various roles – partner, advisor, and even investor. They’ll be in a perfect position to fulfill each of those but if not, at the very least he or she may know others that would so you can ask for references.
As with every type of reaching out, both offline and online, you need to establish a certain level of credibility before posing the investment question.
And that leads me to my final piece of advice:
to fully leverage the power of networking, use it for honest reasons.
I’ve always maintained you should look past your interest. Networking can be a very healthy and productive tool if you don’t pursue it for ROI-related reasons. In fact, I’d call it a way of life because it’s your name and brand as an entrepreneur that is at stake. Being an honest and genuine person networking-wise, you can gain friends while continuously showing interest and passion for what you do. Sure, you can’t know if or how the dots will connect at the end of the day but it can’t hurt to try and be the best version of yourself, can it?
Being live at the scene is a rare opportunity to get in front (literally) of angel investors who are actively looking for the next business to invest in. Some of the online platforms mentioned above like FundingPost even arrange events so entrepreneurs can meet potential investors face to face.
A bunch of good things started with a simple online search and meeting angel investors is no different. The good news is there are plenty of online platforms to go through. While it’s a term that covers quite a bit, in this particular case online platforms refer to directory-style websites that help entrepreneurs connect with angel investors via the magic of the Internet.
Angel Investment Network : is growing community of entrepreneurs and investors. Help investors and entrepreneurs build lasting and profitable relationships to build better businesses and brighter futures. Connect investors with startups and businesses from all sectors to ensure the relationship is valuable to both parties.
Note that these websites do not directly provide investor funding; what they offer is the chance to make the connection with angel investors that may be interested in what you’re offering.
Final Thoughts
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.