Worldwide, billions of euros are invested every year in startups, by venture capital funds, but especially also by angel investors. Did you know that venture capital is far from being the most common source of starting capital? Angel investors generally finance more than 10 times as many companies as venture capital funds!
Read more about the difference between angel investors and risk capitalists here!
What is special about this large market is that there is little data available on the decision-making process of angel investors, investors who invest in an "early stage" of a start-up capital and knowledge.
It is difficult to predict whether a startup will succeed, what do angel investors base their choice on when investing in a young company? We found out thanks to the findings of a study by Arthur Korteweg and Shai Bernstein! They devised an experiment to determine the characteristics of distinctive startups. With the result:
The average investor finds the founder (s) important, not so much the sales base or current customers.
Probably not really a surprise, the importance of the founders was a decisive factor years ago. You can have a very good business model, but if the team behind the business model is not very good, angel investors generally see no reason to invest. Who is behind the company?
This of course does not mean that angel investors only look at the founder (s). They naturally also look at the market size, the service or the product itself and the competition.
Does investing based on the company's founders work? That is up to you! It can be difficult to raise capital in the ideas phase. If you prove to be a match with your startup, you can make an appeal to an angel investor.
How do you appeal to a potential investor?
In any case, make sure that the potential investor learns more about you personally, but also about your idea. As a founder, it is your most important task to convince the angel investor that you are the person who will take this startup to the next level.
A major advantage of working with angel investors is the fact that they are often more willing to take a greater risk than traditional financing institutions, such as banks. Another advantage of working with angel investors is that they not only invest capital, but also bring a lot of knowledge, experience and a large network.
Angel investors are wealthy persons (or groups of wealthy people) who invest their own money in companies. Keep this in mind at least when approaching a potential new partner.
A tip from Holland Startup: be yourself. Represent your passion for the startup. In general, that is all you need to convince an angel investor to close a deal.
At Holland Startup, first-time entrepreneurs fulfill their entrepreneurial ambitions. We guide, coach and finance young entrepreneurs to turn ideas into successful startups.
We enable young entrepreneurs to shape our society! Are you in?