8 Ways to Find The Perfect Angel Investor - Finmark
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8 Ways to Find The Perfect Angel Investor – Finmark

Thinking about getting angel investors, but don’t know where to start?

where should I look? what questions should you ask them? How to distinguish a good investor from a bad one?

Reading: How to connect with angel investors

In this guide, we’ll explain everything you need to know to find and choose the perfect angel investor for your startup.

index:

  • what is an angel investor?
  • where to find angel investors
  • what to look for in an angel investor
  • 4 steps to determine if a angel investor is right for you
  • how to track your conversations with angel investors

what is an angel investor?

Angel investors are people who invest in business ventures, such as startups, using their own capital in exchange for shares. they often provide startup founders with capital for their business, but do not have any operating voting rights in the company.

Angels can come from many different backgrounds, such as venture capitalists, corporate investors, wealthy individuals, and members of angel networks. They usually operate as individuals, but it’s not uncommon for multiple angels to team up to form a syndicate when making investments.

An angel investor usually has a business or entrepreneurial background because they can act as an advisor to the founders of the startup they are investing in. this can be of great help to first-time founders trying to grow a business.

There have never been more resources available to find and connect with potential angels. Since the world is as connected as it is, we’ve listed below some of the best ways to find angel investors.

8 ways to find angel investors

Once you’ve decided you want to attract angel investors, the next step is to find them. If you’re not already connected to a network of emerging investors or wealthy people in general, you may not even know where to start.

but don’t worry! Here are eight places to find angel investors for your startup.

1. list of angels

angellist is a popular website where startups can recruit and find investors to partner with for funding. its main goal is to serve tech startups and it works well as a reliable tool with excellent reach in the industry.

You can create a personal profile along with a company profile to appear in the directory. this will help your startup gain some exposure and be in the right place to seek out investors and allow the angels to seek you out as well.

2. angel capital association

Angel Capital Association is a group of accredited angel investors with business experience and high net worth to help lead the first rounds of seed angel investment. Getting involved with aca is simple and they provide direct access to a full directory of potential investors.

There are over 14,000 angel investors and it’s a tight-knit community that makes networking for future partnerships even easier.

3. burst

gust is another trusted angel investor network with a directory of thousands of different startups and accredited investors. These directories help make the research process faster because these investors are already highly qualified to list. however, you should still do your own research before working with any investor.

You can also work directly with gust and they will help you determine your best course of action for financing.

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4. angels forum

angel forum is a company that connects startups and investors by creating a community to help fund angel rounds. All investors are seasoned professionals with years of experience, so you won’t be getting involved with inexperienced angels when using this resource.

Angel Forum operates in both Canada and the United States, so they have a powerful network available for your startup.

5. angel investment network

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Angel Investing Network is a US-based platform. uu. which helps to bring together startups and angel investors. you have access to investors from all over the world with exactly 285,542 angel investors available to connect in your directory.

After registering, you can create a pitch within the platform and post it live on the site for investors to view. investors can find your pitch and contact you directly to eliminate the amount of outreach you need to do. this is a great add-on option to extend your reach.

6. social networks

You don’t just have to stick to specific investor platforms to find angel investors. Social media can be a great place to connect with your next investor. Twitter, in particular, has become a hotbed for connecting startup founders with angel investors.

finding angel investors on twitter

To find investors on social media, start by talking about what you’re creating. Talk about the journey of building your startup and document what’s going on. that will build an audience and make it much easier to connect with investors. in some cases, they will contact you first.

7. networking events

If you prefer to connect in person, there is no better way to get involved and meet potential angel investors for your startup than networking events. you should look in your local community and nearby cities that are hosting great events and grow your network.

8. friends & family

One option that has been used so many times in the past to get some famous start-ups off the ground is the friends and family option. If you’re building something you believe in, there’s no better way to tap into your network than to seek out investments from the people closest to you.

Of course, you should keep in mind that getting investments from family and friends can sometimes complicate the relationship if your start-up doesn’t go as planned. only accept an investment from friends and family if you’re okay with the potential consequences.

what should you look for in an angel investor?

Not all potential angel investors will be right for you. It is important to consider what you value most and what you hope to build with this investor. Use the factors below to find high-quality investors who can help make a difference in your startup’s growth.

industry experience

When looking for angels, it’s best to start with those who have specific experience in your industry. so if you’re a tech startup, you’d be better off starting with investors who have previous technology experience rather than reaching out to healthcare investors.

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Not only will they be more interested in investing, but in the future they could also act as a great advisor due to their previous experiences working with similar startups.

investment experience

The next factor to consider is investment experience. As a first-time founder, it’s better to get involved with an angel who has a lot of prior experience rather than a first-time investor.

You can even go one step further and look for an accredited investor as well. however, accreditation does not have to be the determining factor. instead, look at your past investments and research how they’ve developed to help you determine what’s best for you.

financial stability

When you engage with an angel investor, they should be high net worth individuals who have no problem writing you a check for a specific amount. and you want to make sure they can invest this money without potential problems in the future.

For example, you want to make sure your angel isn’t investing money with you that you’ll need in the near future. this puts unnecessary stress on the startup and isn’t worth getting involved for any founder.

tutoring capacity

As a founder, it can be difficult to navigate the tricky world of startups and the pre and initial rounds of fundraising for your business. With an angel investor, they can also act as advisors to you and help you in times of need.

If you want someone to be willing to serve as an advisor, this is another factor to add to your research criteria because not all investors will want to do this. But when you find the right one, you can change the way you approach business knowing you have a talented mind to turn to.

4 tips to determine if an angel investor is right for you

After you’ve made a few connections and determined some suitable potential angel investors for your startup, it’s time to determine exactly which investor is the best fit for you.

1. get referrals

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Some startups like to only work with accredited investors to ensure they engage with someone who has prior investment experience. however, whether you choose an individual or accredited investor, you should always check with references and keep track of previous investments they have made.

By doing your research and learning about their past investments firsthand, you can find out how they approach the process and what they will look like as your partner moves forward.

Expect to spend 3-6 months looking for potential investors, so the more thorough you can be, the better.

2. align goals with your investor

once you find some potential investors, it’s best to talk about the goals you both have to see how closely you are aligned in the future. this includes the amount of money needed, capital, investment time frame, and decision-making control.

By setting goals, you can eliminate the risk of future confusion. the goal is always to grow a startup with a potential angel exit point, but by determining these goals early on, you can build a better working relationship.

3. establish a relationship

After discussing your goals, you can also begin to build a relationship with your angel and determine how involved they will be with the startup.

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Some angels want to step in and act as advisors based on their previous business experience to help founders in times of need. however, some angels would prefer to simply invest and act as a silent partner.

You should discuss whether your angel will work with your startup as an advisor or silent partner to better build that future working relationship together.

4. treat it like an interview process

It is important to operate with patience and treat each call as an interview process. put value in what you and your startup do and only work with investors who can embrace your vision and work with you to make that vision a reality.

This means you need to take notes during calls, go into each interaction with prepared questions, and do a lot of research about your prospect before you meet with them.

how to track angel investor interactions

When contacting angel investors, you should treat the process like a sale. this means that all leads must be tracked, interactions must be recorded, and your pipeline must always be full.

We encourage all founders to go through the fundraising process to create an investor channel to properly track all of this information. You can start getting leads into your funnel using the resources we mention in this guide.

but when it comes time to keep track of your conversations with the angels, you’ll need to go one step further with a channeling. we recommend using a spreadsheet, a crm or both to start creating one.

To complete your pipeline, consider a few things, such as the investor’s location, financing amount, and industry experience when searching for potential clients. You can save time by narrowing down your search and looking for investors who have previous experience investing in startups like yours.

This will help keep track of investor interactions and make the process even easier. You can even look at competitors or similar startups that previously raised money for inspiration.

We also recommend starting and working your way up to bigger names as you begin to gain experience and have a chance to test your process. tag investors as low priority and high priority to further filter your pipeline for accuracy.

After the first few calls, you can gather a lot of information about the types of questions they will ask you and what information they value most. this allows you to keep track of everything that’s in progress and prepare for the next call a little differently.

find your angel investor

Going through the process of raising capital is stressful, especially for first-time founders with no prior experience in this area. Researching potential angels and building your network is a high-value but time-consuming task.

finmark is a financial planning tool to help startups manage finances and create more accurate financial projections and forecasts. you can sign up for a free 30-day trial today!

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