Angel investors are interested in developing start-ups and equality ownership or convertible debt is what they want in turn.
This type of investment is pretty widespread nowadays, huge companies like Uber and WhatsApp paved their way, not without the help of some angel investors.
Well, since angel investment proves to be so successful it surely attracts a lot of attention followed by countless questions.
What are angel investors looking for? What kind of business and company do you need to have to attract them? And finally, what makes them angelic? Here are key points every entrepreneur has to know about.
Well, since angel investment proves to be so successful it surely attracts a lot of attention followed by countless questions. What are angel investors looking for? What kind of business and company do you need to have to attract them? And finally, what makes them angelic? Here are key points every entrepreneur has to know about.
Money first. Angel investment usually ranges between $25,000 to $100,000 but it can go higher in some cases. This might not be exactly the sum you wished for, however that hints that there might be plenty of investors around. But the more you will learn about angel investment the more you might like it, making the financial aspect matter less to you.
Who Are They and What Motivates Them?
Sometimes profit isn’t the priority for angel investors. Since many angel investors are entrepreneurs themselves, they are more than happy to help young start-ups succeed. Investors can also be other professionals like lawyers, doctors, and business executives.
Your motivation and willingness to succeed might not matter as much to venture capitalists as it would to angel investors. Well, this probably shows what earned them their name. The truth is that most of the start-ups fail, so angels that are investing so vigorously might end up without a dime. So, the conclusion is simple- they invest because they want to.
But that doesn’t mean they are giving money left and right. To be successful you need to try to be the best and that is true for angel investment as well.
Affiliated and Non-Affiliated Investors
All angels investors can be divided into these two groups. Affiliated angels are those who are in contact with your business. However, knowing them personally is not a must. While non-affiliated investors are those who have no connection to your business. Naturally, it makes more sense for you to target affiliated investors since they are aware of who you are and what you’re doing.
What Is Important for Angel Investors?
The Team: After all, it’s the people who run the business and whom investors trust the money. Strong management and leadership are a must. Your team is the top evidence that the investor will keep in mind while deciding. If you prove experienced and trustworthy and capable of moving your enterprise to the next level, the luck is on your side.
Business Plan: Show them that you’re worth it. It should be promising, complete and persuasive. What is your vision? What change do you want to make? Dreaming big is never enough, keep ready your financial projections, marketing plans, and your market specifics.
Equity Ownership: While some angel investors consider giving loans to businesses an option, many are still looking to share the ownership. If you are the sole owner of your business, you must be ready to give up some of it when angels are involved. You might need to present a formal shareholder’s agreement which details investor’s role and returns.
The Ups and Downs of Angel Investment
Angel investment is perfect for businesses that went beyond the start-up phase but are still in need for some funding to move forward. Your business might have some revenue, but you’ll still need some cash to make big steps and there is where angel investors will help you. Not only will they help you but they are also likely to guide you and have your back.
The downside is that you can end up giving away up to 50 percent of your business. What is scarier, is that at times investors might see you as the one who prevents the company growth and eventually you can end up losing the position you earned for yourself.
Pursuing angel investment will make you sweat, as any major decision for your business. If you are determined to attract angel investors know how to do that. Create a top-notch business strategy and be ready to review and modify it when the need arises. Do some research about the investors themselves before meeting them, that’s the best way to show your motivation in practice. So, put the best of your skills at work and don’t miss the brilliant chance to have an angel investor by your side.