It doesn’t matter if you’re just looking for a few seed investors for startup capital or you’re looking to go through your third round of money-raising to further expand your company, angel investors are an ever-present option that every business owner should at least be aware of.
In this brief overview, we’ll go over what angel investors are, how they operate, and how you can go about working with them. Read through till the end to see some of the investors that we recommend you check out.
What Are Angel Investors?
An angel investor is a person or company that chooses to invest in a business (generally a startup or younger business), giving them capital in exchange for owner shares (i.e., equity) in the business.
Now, if you’ve been in the investment and financing world for a while, you probably thought that definition seemed a bit “broad”. After all, virtually all investment firms and venture capitalists invest in a business in exchange for a level of equity in the company. What makes angel investors so different?
Well, the answer to that deals primarily with how mature the business is at the time of requesting funds. Generally, while most investors will only put their money on companies that have been around long enough to warrant trust, an angel investor will often stick their money out on companies that are relatively new or are only just starting. In addition, angel investors don’t require you to pay the money back via monthly periodic payments. This gives a business time to grow and develop before needing to repay any debts, something the vast majority of other investors don’t offer.
An example of a quality angel investor company is Macdonald Ventures. Not only do they help finance startups, helping them achieve their potential, but they also go that extra mile to ensure the business owners are at the top of their game.
How To Get An Angel Investor
To get an angel investor – and a series a investment – the first thing you’ll need to do is make sure your business qualifies for investing. A common misconception is that angel investors invest in anything when that’s categorically not true. Yes, they have a lower barrier to entry, when compared to investment brokerages and venture capitalists, but they still expect a return on their investment. More than that, they expect a reasonably high return on their investment. Don’t expect to get a lot of callbacks if you’re big plan is to open up a small boutique or nail salon. On the other hand, if you’re planning to revolutionize the way computers work, provided you’ve got something more than talk, you can reasonably expect more than a few deals right off the bat.
You also want to make sure your pitch and plans are on point and don’t leave any room for doubt or apprehension. Like any investors, angel investors expect to know that their money is going to be put to use in ways that will grow the business. If they smell or sense you don’t know what you’re doing, that can easily scare off an otherwise interested party.
From there, once you’re reasonably confident in what you’ve got to show, you can check out online directories like AngelList, as well as your local Chamber of Commerce. You can also hit up universities, which often have connections with angel investors. Heck, you could even try your luck by getting in front of Mr. Wonderful himself, Kevin O’Leary, on Shark Tank – if you’ve got an interest in being on tv, that is.
What Are Some Good Angel Investors?
The good news is that, if you’re willing to do some digging, there are some very reasonable and good investors out there. Below are just a few that are worth checking out, depending on your location and what you connect with.