5 Tips on Finding the Right Angel Investor
You’re ready to launch your startup, and you’ve determined that you need to raise
capital to get it launched. While it is tempting to take money from anyone who will
invest, be careful before you get into a relationship that could end poorly. The ideal
angel investor looks like this:
1. Investment Experience
The best angel investors will have made enough angel investments to know what they are getting into without getting cold feet during the process. You don’t have time to talk someone into being an angel investor. You want someone actively making seed investments each year and has had success as an angel investor. They should actually seek investments, enjoy the process, and be eager to meet with you.
2. Startup Stage Experience
The best angel investors will understand your stage of business and be patient as you work through the inevitable snags in the early stage of a startup. Ideally, they’ve been in your shoes and executed successfully in a startup environment. It can be very frustrating to take money from a big- company executive with far different expectations and that offers advice that doesn’t apply to your context.
3. Industry Experience
The best angel investors will also know your industry and can create tremendous value with their knowledge and contacts. If they can see how they can invest $100k in your startup and then immediately increase the value by 10x by helping you seal a big strategic alliance that gets you to market in a big way, then you’ve got a great angel investor prospect.
4. Business Model Experience
The best angel investors will know your business
model and understand exactly what you are attempting to do. And they will be ready, able, and willing to mentor you. You don’t want to be constantly explaining what you do to your investors. Ideally, they get it and are constantly suggesting ideas and improvements.
5. Personal Trust
The best angel investors will know you and be willing to write a check to invest in you and your business. Even if you don’t know them well, if they know you, like you, and trust you, then you are well on your way to landing an investment.
Example Ideal Angel Investor
Let’s say you’ve been working in industry “X” for several years and the idea for your startup bubbled up from your experience in your industry. Your ideal angel investors will include wealthy executives from the industry that can quickly grasp your unique idea and value proposition, are excited to be part of your startup, have the resources to invest $50k – $250k each in your startup, have the savvy to help you refine your plan, and can help you get to market more quickly through their vast networks. Perhaps they were entrepreneurs in the industry and recently sold their companies and now have time and resources to invest in exciting startups like yours. And because angels tend to flock together, once you get one, your chances of getting several of their friends is much higher, even if they are not familiar with your target industry or customer set.