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What Is an Angel Investor - Read perfect guide

what is an angel investor

Angel investor is next best option to go for when you don’t have any source to fund your business.

Getting capital for a business can be some time so difficult that many entrepreneurs pray to get cash. Angel investors are the perfect solution to there’s problem and prayers.

Definition of angel investor

Angel investor is who usually provides the capital needed for a startup.

Angel investor doesn’t draw blank cheques. They rely on progress and do well prior research about every aspect of our business plan before taking a decision about investing in your business.

Business growth ideas that you can use for your startup or small business

Investments through group or network.

One of the striking features of an angel investor is that they always invest through group or network.

They take the risk for the exchange of convertible debts or ownership equity.

Best way to find angel investor

While searching for Angel investors, people usually rely on traditional method through the network.

Finding investors through the network is the best way as those investors will be familiar with your previous records, your potential, your strengths and weakness as well as ethics and style of working.

Some important strategy to find best business networking source

But every time getting angel investor through the network is not a good option. With advancement in technology, the internet has helped to get access to angel investors worldwide.

A USA based Angel resource institute has developed an extensive list of investors, which can be 1st step in finding an investor.

Don’t expect money to come quickly as investors are thorough and they closely monitor you and your business before investing.

If you are looking for angel investors for your small business or startup then there are 4 ways by which you can find ANGEL INVESTORS for your startup

Friends and family

Family and friends are the best and closest option for getting fund. But it has both advantages as well as the flip side.

On plus side,

Family and friends know you very well, that can help them to decide whether to invest or not based on how attractive your business in their eyes.

Family and friends can be an instant source for generating funds for startup. But on the flip side, there is a problem in maintaining personal and professional relation mix.

Moreover, 90% of the startup fails,

Hence there is a huge chance of losing all the money invested by family and friends.

The best way is to ensure that family and friends know that investing is highly risky and they should only invest if they are 100% confident.

Individual angel investors

Finding directly Angel investor can be tedious and individual investors is the hardest path to find investors.

There are 2 reasons –

Firstly they prefer to be autonomous and secondly they don’t know you which make a solid foundation for not investing in your business.

Some wealthy people have built investing offices in which their managers search for the deals to invest in.

The main task is to find such investor who knows your business and can bring real-time value and benefits to you as well your business on a whole.

If an investor has preferably experience in related kind of business, then it’s easy to get money from them. Identification and approaching such individuals is important in getting quick investment in your business.

Angel investors network

Raising of funds through Angel network is the favorite way of entrepreneur’s to get startup capital.

Investors keep aside money for investing in those deals which have been screened by professionals that sources deal with a network of investors.

Hence individual angel investors can keep their autonomy as all the works are performed by expert’s managers on their behalf.

One of the best advantages of raising money through a network of angel investors is that it saves the time of calling and approaching every individual angel investor and a large amount of money can be raised through a network of an angel investor.

Fund raising advisor

 If all the sources you were considering for raising funds fails, the only option you left is with raising fund through fund raising advisor.

The problem with it is that raising of funds through this route can be expensive with the advisor taking off 5-6% of total success cash if you manage to get money.

This work when you are not sure and cannot rely on your abilities to raise money on your woe, it is best to hire an advisor.

But make sure to be reasonable with them as they will approach only those investors that are related to your business.

Here is what angels particularly care about:

  • Here is what angels particularly care about:
  • The quality, interest, loyalty, and morality of the founders.
  • The market opportunity being addressed and the potential for the company to begin very big.
  • An undoubtedly thought out a business plan and any early evidence of obtaining traction toward the plan.
  • Interesting technology or intellectual property.
  • An appropriate valuation with decent terms.
  • The viability of raising additional rounds of financing if progress is made.

What do angel investors like to initially see from an entrepreneur?

  • A clearly flexible elevator pitches for the business.
  • A decision-making summary or pitch deck.
  • A prototype or working model of the proposed product or service (or at least renditions).
  • Early adopters or customers.

Should the entrepreneur expect the following question while concerning the management team and founders?

  • Who are the manufacturers and key team members?
  • What pertinent domain experience does the team have?
  • What key add-on to the team is needed in the short term?
  • Why is the team uniquely capable of implementing the company’s business plan?
  • How many employees do you have?
  • What inspire the founders?
  • How do you business plan to scale the team in the next 12 months?