How to Find the Right Angel Investor for Your Startup

A new year has arrived, and it’s time to hit the ground running! For a business owner like you, this may involve getting people to believe in your business enough to put their money into it—for example, through angel investing.

Raising money for your startup is arguably one of the most important steps of your journey. Nail it, and you’ve given your business a headstart and can focus on other non-financial issues. There are many ways to raise money for your startup, like crowdfunding or taking advantage of tax credits.

Still, angel investing remains one of the best fundraising options because angel investors bring more than money to the table. But what is angel investing, exactly, and how do you find angel investors for your startup?

What Is Angel Investing?

Angel investing typically involves an investor providing financial support to startups and entrepreneurs in exchange for a stake in the company. They are different from venture capitalists because they invest their personal funds. So, just know that angel investors are typically wealthy people (not connected to investment firms) willing to take a chance and risk their money in the hands of a startup founder.

Venture capitalists, on the other hand, use other people’s funds. These experts manage funds on behalf of the investors who trust them. So, they handpick startups they believe are viable, support them with cash, and leave it at that. To manage their risk, venture capitalists typically spread a large amount of money in bits across various startups. So, you’re not likely to get life-changing investments from them.

When Do You Need Angel Investors?

If your startup is still in its pre-seed stage and too young to qualify for a huge bank loan or too young for venture capitalists to believe in it enough to volunteer funds, consider looking into angel investments.

From the name “angel,” you can already tell that angel investors love to help even when things are not fully aligned. These investors typically come in at a startup’s early or pre-seed stage. They may ask for minority equity stakes in your company and expect returns on their investment through an exit, such as if you eventually sell your company or make an initial public offering (IPO).

In addition to offering money, angel investors often act as advisors, which can be helpful for young businesses. As a new founder, you will gain from the expertise of successful business people who have gone before you. But the big question is how to find these angels in human form.

Often, the best way is to network with people who are interested in the kind of business you run. They may be family, friends, business owners, or other entrepreneurs. You can even find startup angel investors online.

How Do I Find Angel Investors for My Startup?

Now that you understand how angel investing works, here are some things you can do to get this type of funding.

1. Identify Your Business Needs

The first question to ask yourself is: What type of funding does my business require, and what kind of investment terms would work best for my company? Be specific about how much you need and where the money will go.

2. Research Potential Investors

Now, you can’t just run off with the first person who offers you money. Your startup needs funding, but you cannot afford to be desperate. Instead, look into your potential angel investors for startups, their track records, experience, and areas of interest to see if they’re a fit for your startup.

3. Prepare Your Pitch Deck

Next, you should create a compelling argument to convince angel investors to fund your startup. Show them why your company is worth investing in through a detailed market analysis, business model, and financial projections.

4. Reach Out to the Right People

The next step is networking. We’ve already mentioned how you can find the right people to talk to about your startup. So, what you need now is to build strategic connections with potential investors who are interested in your line of business. Remember that when it comes to networking, quality is more important than quantity.

5. Investigate Different Options

As with everything in life, you cannot put all your eggs in one basket. So, when looking for funding for your startup, it is advisable to widen your net. Consider crowdfunding platforms or other alternative funding sources that may be available to you. Then, weigh the pros and cons of each option to help you make an informed decision about the best funding avenue for your startup.

6. Stay Informed

Keep up with changes in your industry—we can’t stress this point enough. Knowing relevant industry trends will help you to make informed decisions, especially about when and how to approach potential investors and the kind of businesses that are hot in the investment market.

This will further present you as prepared and well-educated when you speak to angel investors. Or, better still, with the right knowledge of industry trends, you can tell investors what they want to hear.

What Are Some Angel Investing Platforms?

As we said earlier, you can find angel investors online, and below, we have compiled some platforms where you can start your search. Here are some places where you can find angel investors for startup businesses.

AngelList

The first option is AngelList, a rich database of over 5 million members, including 100,000+ entrepreneurs and countless potential startup angel investors. Its user-friendly interface allows you to filter your angel investment search by location, industry, and other criteria.

Thanks to this precision feature, you can easily find the perfect match for your startup. AngelList further allows you to include pitch decks, financials, and traction indicators on your company profile. This will help angel investors easily decide if your business is a good fit at first glance.

Beyond these funding opportunities, AngelList is a good platform to grow your network, connect with similar entrepreneurs, and possibly hire new people to join your team.

Angel Investment Network

The Angel Investment Network is another bridge that connects startup angel investors to founders. With about 300,000 investors on the platform, it is believed to have helped startup founders raise over $300 million. Like AngelList, you can easily filter potential investors by location and industry.

But that’s not the best you can get out of this platform. The Angel Investment Network also offers resources like a native blog where you can find helpful articles. Then, there is an interactive forum where you can ask all the questions that bother you and get quick answers.

Also, you can help other members with answers to their questions—only if it's something you can answer, of course. You can also leverage the network’s fundraising courses to help you learn about finding an angel investor. So, if you’re just beginning your startup journey and don’t have a wide network, this platform is a good place to start.

Republic

Republic is a popular crowdfunding platform where you can show off your business and attract angel investment. How? Simple! By allowing users to connect to startups and other early-stage businesses. True to its mission, this platform has a low entry barrier to aid inclusivity.

This means that both accredited and non-accredited investors can join the platform. Basically, anybody can be an angel investor here. Then, thanks to its user-friendly interface and diverse portfolio of companies, users can easily connect with businesses that match their interests, from founders to angel investors and vice versa.

When potential investors land on your business account, they can easily, at a glance, see what you’re all about, from your company’s goals and finances to valuation.

Finally, through the “Note” program, investors get the chance to share in the platform’s success. How? Republic simply pays investors a percentage of their earnings as a sort of thank you for using the platform. Imagine earning money back when spending money. How cool can an investment platform get?

Gust

Gust is a one-stop platform for investors looking for resources and angel investors. Its user-friendly interface, secure communication, and investment tools simplify the process, especially for early-stage founders.

Thanks to these useful features, over 800,000 companies and 80,000+ investment specialists have found a home on this platform. We’re not surprised to see that they have raised over a billion in financing since inception.

You can find everything you need to grow and scale your business here. Besides funding, Gust has a special feature—Accelerate, which makes product launches easier for members and provides assistance for legal issues where necessary.

Get the Best Advice

Angel investing is not rocket science! With a bit of research and extra effort, you can make your business attractive to potential angel investors. The good thing is that you don’t have to do it alone. At Foreword Companies, we help business owners, entrepreneurs, and industry professionals make informed business decisions and achieve tremendous success. 

With our expert guidance, you can hit your goals much faster. Contact us to learn more about how we make businesses better and help you land your desired angel investors.