All small to medium businesses require extra capital at one point because the extra cash contributes to a business’ growth.
It may be challenging to find a trustworthy source for capital. Big corporations are not the best option because it can be difficult to put your vision in someone else’s hands.
Angel investors come to the rescue as they personally invest their money into your business. Your business is safer in their hands because you’ll be dealing with them directly.
You can worry less about finding venture capitalists because this guide will teach you how to find angel investors.
Why Look For an Angel Investor?
It is less risky: Angel investors use their own money to fund your business. If something goes wrong and your business fails, you are not required to pay them back. Thus, finding angel investors is less risky than using debt as a financing method.
They have valuable knowledge: It is one thing to have an entire team that is knowledgeable about the business. It is even more useful to have advisors who understand how finance works. Most investors are in the finance or legal business, which means that they have a lot of value to add to the business.
They are more reliable: You might be considering venture capital firms as your source of funding, but this means putting your business idea in a stranger’s hands. The advantage of using angel investments is that you can get to know the individual investors personally.
1. Be Specific About Your Needs
It was challenging to find angel investors before the internet boom. To find reliable and trustworthy investors back then, you needed valuable contacts and solid networks, or constantly checked for investors listed on the Securities Exchange Commission (SEC).
Many people wonder how to find angel investors nowadays? The internet is at your disposal, which means anyone can connect with people from different verticals with a simple click.
Luckily for you, there are online platforms available now that make the job easier. However, you must know precisely the type of investor you are looking for before embarking on your search.
You should think about whether you’re willing to share equity or if the investor will have an active role in the company. You should be specific about the angel capital you seek and what you have to offer.
2. Start Your Search Close to Home
While it may be tempting to start by reaching out online, do not overlook any active angel investors that may already be in your area. Nearby investors are a great option because they understand the importance of community.
As a business owner, you understand the importance of working in a team. Finding a nearby investor means that they can seamlessly fit in with the rest of the team. Most investors also prefer investing close to home because it’s easier for them to participate in the business.
Investing in a nearby business means that the angel investor can easily pop in to provide advice and other essential resources.
3. Prepare a Solid Business Plan and Pitch
Angel investing is an ideal source to attain funding, but keep in mind that it requires a lot of work. Before you get other people on board, you must be clear about the business model.
You need to know whether you want to use equity crowdfunding or whether you want the professional angel investor to play a less significant role.
Once you know what your start-up company stands for, you need to package it in a way that attracts investors by explaining your business goals and how you plan to reach them.
Speak about your company in a manner that convinces people to invest their personal money into it. Brush up on your presentation skills and make sure that you practice the pitch before presenting it in front of an audience.
4. Always Follow up
The process of finding angel funding can be taxing. You most likely won’t get lucky on the first try, and you’ll have to trust the process and continue pushing. Don’t forget to follow up with potential angel investors once you present the pitch.
Following up with the investor after the presentation shows how committed you are to the process. It shows that you are interested in them, even if they have not reached out to you.
The best way to follow up is through email. You can send them a quick email to inquire whether they have thought about investing and when they will have a decision. Following up through email opens the door for them to ask questions and allows the opportunity for you to reassure them.
The process of searching for and attaining extra funds can be physically and mentally taxing. You may have to endure some rejection before you find the right angel investor who can help with support.
Remember that no two angel investors are the same. Adjust your pitch and general approach according to who you are dealing with. Some may want exchange for equity while others are genuinely interested in being a part of start-up companies.