Angel Investors are generally high net worth individuals who invest early in the formation of a new business, usually in exchange for equity capital. In this article you can read more about angel Investors, what exactly do they do? And what are the pros and cons of an angel investment?
Who are Angel Investors?
To be an angel investor, you don't necessarily have to be an accredited investor. Incidentally, many angel investors are accredited investors.
How are angel investors different from VCs?
Angel investors are wealthy individuals (or groups of wealthy individuals) who invest their own money in companies. Venture capitalists (VCs) are employees of venture capital firms who invest the money of others in companies.
How do angel investors work?
Angel investors invest their own money so that they have different sources of income.
They generally invest in companies in sectors they know a lot about.
Suppose an angel investor previously earned money in the software sector, you can imagine that he now also invests his money in the software sector.
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.
angel investors are usually experienced business people with several years of work experience and knowledge.
Angel investors generally sign up early in the life cycle of a start-up company. One of the reasons they are called angels is the fact that they are willing to put money into start-ups that may have a hard time finding financing.
Angel investors are often mainly interested in the founder. Who is behind the company?
Of course, that does not mean that angel investors only look at the founder. They naturally also look at factors such as the size of the market, the service or product itself and the competition.
As a founder, your main task is to convince the angel investor that you are the person who will take this startup to the next level.
Tip: read our article about the secrets of Listed Billion Dollar Companies !
How do you go about finding an angel investor?
The very first thing you focus on is your pitch deck. Contrary to popular belief, this is not a sales pitch, but a short, well-developed explanation of the problem that you solve with your startup. That's it.
When approaching potential angel investors, make sure they learn more about you. Most angel investors will ask for a pitch deck. Again, a short well-developed explanation of the problem that you solve with your startup. So do not send too much information, most likely your potential investor is not only working on your startup…
Suppose an angel investor asks for a more extensive summary, you can send the summary of your business plan. Here your potential investor will find things like your problem solving, the market size, the competition, the management team and the financial picture.
If you have made an angel investor enthusiastic with your pitch deck or summary, it comes to a meeting, a pitch meeting!
Tip: take the time during the pitch meeting to build a good relationship.
Angel investors would rather invest in an entrepreneur they like than an idea they like.
Another tip: be yourself. Represent your passion for the startup. In general, that's all you need to convince an angel investor to close a deal.
Don't let that scare you! Are you ready?
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