How to Find Angel Investors
A startup’s success is attributed to several factors including the company’s dedication, entrepreneurial skills, the consumer’s need for the products or services offered, effective marketing, business viability, and more. But as passionate, business savvy, and innovative as a startup may be, sometimes it all comes down to money. To launch, grow, and build a scalable startup, you need adequate funding, and a great option is to learn how to find angel investors and gain their support.
What is an angel investor?
Angel investors are usually wealthy individuals who invest their money into early-stage companies in exchange for equity in the business. Typically angel investors are looking for long-term investments and are able to provide startup mentorship and business expertise in addition to their financial investment.
Is it difficult to find angel investors?
Generally, it’s not hard to find angel investors when you’re looking in the right places, but what can be tricky is learning how to get them to invest in your business which we will cover further down in this article.
Let’s first look at ways to find angel investors.
4 Ways to Find Angel Investors
1. Start with your local community
Angel groups and networks exist all over the world, but many angel investors take a greater interest in locally-based startups. Research groups that exist in your community.
2. Use online databases
Many angel groups and networks are listed on online databases. Websites like Angel Investors Ontario list all Ontario-registered angel investor groups, making it easy for Ontario-based startups to find angel investors within the province.
Other websites such as AngelList, Angel Capital Association, and Angel Investment Network give you access to thousands of investors.
3. Search social media platforms
If your startup is active on social media, particularly on Twitter and LinkedIn, it can lead to connecting with angel investors. Your startup’s social media channels should follow and engage with relevant businesses and influential people.
In general, having an effective digital marketing plan can help you connect with influential people and angel investors.
4. Attend business networking events
Registering for local conferences, industry events, and business socials will bring you closer to connecting with angel investors.
Local networking events are often attended by angel investors, and it’s a great way to make introductions and plant seeds for building long-term relationships.
How to Secure an Angel Investment
Finding angel investors is one thing, securing investments is quite another. Landing funding from an angel investor is all about being prepared, polished, and passionate.
PREPARE a detailed yet concise business plan
Angel investors want to assess your startup’s viability and growth potential. Write a detailed and well-organized business plan that includes elements such as an estimate of how much funding you need, your business strategy, a competitor analysis, and financial objectives.
POLISH your elevator pitch
Whether you connect with angel investors online or in-person, having a well-executed elevator pitch is essential to capture their attention and interest. Aim to keep your pitch concise and simple, and include why your startup is a solid investment.
PASSIONATE entrepreneurs are an angel’s best friend
When angel investors invest their money, time, and expertise, they are not only investing in a business but in the person or people behind it. If you are not passionate and driven, angel investors may question if you have what it takes to go the distance.
How much money can you ask for from angel investors?
As a general rule, startups need to calculate two things before determining how much money they should ask for: Business valuation and funding requirements.
Determining your business valuation will help you come up with an asking amount that is proportionate to how much your startup is worth and also determine if this amount alone will cover your startup’s needs.
Most angel investors will not look at requests that exceed $1 million and will be looking to take a percentage of your company that equals the percentage of funding in relation to your business. For example, if your business is valued at $1 million, and your startup requires $250K in funding, the angel investor will most likely want approximately 25 percent of your company.
How do I get help landing angel investors?
Startup incubators mentor entrepreneurs to launch, grow, and scale their businesses. Startup incubators place a large emphasis on acquiring funding as this is a large component of any new business.
Innovation Cluster Peterborough and the Kawarthas teaches clients how to secure investments, connects them with local angel investors through the Peterborough Region Angel Network, and prepares them by teaching them how to build a solid business plan, give an effective pitch, and ultimately get the funding they require.