How to Find Angel Investors for a Startup
Last Updated: By TRUiC Team
When you have a brilliant startup idea but lack the immediate funds required to make it a reality, angel investors are there to save the day.
While venture capitalists (VCs) invest other people’s money and are typically employed by risk capital firms, angel investors use their own money to fund startup ventures. These “angels” are usually affluent individuals who invest in risky startup businesses with hopes of obtaining a significant return after the company becomes profitable or is acquired.
In this guide, we’ll walk through the process of finding angel investors for your startup from start to finish and show you how you can begin to take advantage of the vast experience, knowledge, and business acumen many angel investors possess.
Find Angel Investors
Finding an angel investor for your startup isn’t easy and may even require a fair bit of work, effort, and resourcefulness. However, as any experienced entrepreneur can tell you, some of the most difficult tasks in both business and in life often yield the best results.
While the capital provided by angel investors is essential for growing your startup, a well-selected angel can also help your startup multi-dimensionally by:
- Offering your startup access to their network and connections
- Providing leadership and guidance based on their experience
- Setting up discussions and meetings with valuable prospective clients
- Helping your startup set achievable goals and expectations for growth
When looking at angel investors, it’s essential to determine how their past experiences, industries, and connections complement your business. You might be pleasantly surprised by what they can bring to the table.
What Is an Angel Investor?
Angel investors are wealthy and affluent individuals who invest their own money into startup ventures with hopes of a greater return or payout further down the line.
Due to the significant risk that comes with investing personal capital in brand new companies, angel investors will often demand a significant equity stake in your business to make their investment worthwhile.
Angel Investor Pros
- They have industry expertise and advice. Many angel investors only invest in businesses and industries they know, which means they may have some wise advice from their past experiences that can help guide you forward towards profitability.
- They have deep pockets and plenty of capital. Successfully getting an initial angel investment is a tremendous feat, but due to the large amounts of capital angel investors hold, you may have opportunities for further investment as your business grows.
- They offer an expansive network and connections. Most angel investors have extensive industry expertise and a vast network of connections in their fields of interest. Your angel may be able to connect you with potential business partners, new prospects, valuable customers, and even favorable credit and financing through their banking relationships.
Angel Investor Cons
- You’re no longer in full control of every decision. When an angel investor gives you the funds you need for your startup, they’ll likely expect to have a say in the decision-making process and how things operate. With a substantial amount of capital on the line, don’t expect your angel investor to take a completely “hands-off” approach to how you run your business.
- You lose equity. You no longer have a full equity stake in your startup when you take on an angel investor. The more equity you have, the greater your profit distributions would be. Handing over control over a piece of your company gives your angel investor that profit-sharing potential to offset their risk.
- You’ll be hit with higher expectations. Angel investors are in the business of making money as fast as possible and would be expecting the absolute best work your team has to offer every single day. Sit down with your team and decide whether or not your startup is ready to begin rapidly expanding; an angel would want to grow your company as quickly as possible.
How Do You Find Angel Investors?
Finding the right angel investor for your industry, company type, and team culture can be a challenging process. While it may be tempting to jump on the first opportunity you receive, it would first be prudent to ensure that each opportunity presented to you gets you closer to your high-level business goals.
After all, there are countless methods of finding angel investors today – some of which we’ll discuss in the next few sections.
1. Know How Angel Investors Work
The first step to finding an angel investor for your startup company is knowing how they work and what they expect. Due to the risk angels are taking on, they’ll likely ask to exchange investment funds for an equity stake in your company.
Angel investors are focused on high-potential, high-growth startups that’ll give them the best chance of producing a return on their investment as quickly as possible.
2. Search for Angel Investors Online
The internet has made searching for angel investors much easier than before. Now you can use a series of websites dedicated to angel investors to find those most aligned to your startup’s mission, goal, and purpose.
Browse through all of the angel investing websites below and begin to filter through the angels you find. You just might find the perfect angel investor for your industry and business.
Angel Investor Websites
- Angel Capital Association: The largest angel professional development organization in the world. Features over 14,000 members, 250 angel groups, and 20,000 companies.
- MicroVentures: Vetted investment opportunities that allow startups to raise capital. Currently has over 200,000 registered investors.
- AngelList: Efficiently connects startups with angel investors and sets them up for future business growth.
- Gust: Matches your startup with investors that are most likely to support your vision and growth goals.
3. Ask People in Your Network if They Know of Any Angel Investors
It’s never wise to go it alone. If your friends, coworkers, or acquaintances know any angel investors who have invested in other companies in the past, this may be the perfect opportunity to ask them for an introduction.
Worst case, they say “no.” Best case? Your startup begins growing faster than you ever thought possible.