How To Get Funding from Angel Investors
How do you get funding for your startup from angel investors? The purpose of this article is to highlight some ways by which you can get funding from angel investors.
An angel investor does not refer to divine intervention or funding from above. Rather angel investors are individuals or a group of people who have considerable resources and they invest money into startups or other small businesses.
They usually do not do this as charity, instead, they hope that out of the businesses they invest in, at least some of them grow and thrive and can even end up being the new Google or Facebook. They are usually serial entrepreneurs who will like to be involved in your business and are available to give advice.
- How much do angel investors typically invest?
- What is the difference between an angel investor and a venture capitalist?
- How will you make money for your investors?
- How do you get investors in your business?
Angel investors, in many cases, specialists in their respective fields or industries. However, angel investors are not all the same; they vary from those who have a hands-on approach and would like to be directly involved in the running of the business, to those who sit back and expect progress reports once in a while. They might be loners or part of a group. No matter the differences, they have this in common; they expect high returns from their investments, returns that can be as high as 40%. Having this background knowledge and information, how can you secure funding from an angel investor? You need to know that angel investors are not just your typical business people. They have the wealth and they prefer anonymity. What is more, even after you seek them out and get them, they do not know anything at all about you.
How to Locate Angel Investors?
There are several ways to locate them and one of these ways is through the Internet. There are online platforms through which you can find an angel investor. Some of these platforms include; AngelList and SeedInvest. Another way to find your angel investor is by searching for them locally. Some of them might be prominent local business people in the locality. You can find other angel investors by attending conferences that pertain to the industry you are trying to break into.
In summary, use the internet and industry-based conventions to find your angel investor.
These events are especially viable, as you can pitch or present your business idea to as many potential investors as possible. What is more, most of the investors you meet at industry-based events and conventions are actually actively seeking promising and viable ventures, ideas and entrepreneurs to invest in.
Some people prefer to contact an angel investment network or group while hunting for angel investors. While this is not a bad idea, this method is in most cases, the least successful way to find funding from angel investors. Why? This is because these agencies usually receive hundreds or even thousands of proposals every day, and unless you have inside connections or something like that, your request or proposal might get lost among the thousands of proposals received each day.
So, we have seen where to find angel investors. How can you convince a total stranger, with a lot of money, to sign a cheque and invest in you, a stranger? How can you sell your idea to a potential angel investor?
Here are some preliminary steps to take:
Step 1: Know your Investors
You should know the particular area of interest or specialized industry your potential angel investor is interested in. You should not expect an angel investor who specializes in the fashion industry to invest in your technology-based startup (unless the technology in question somehow relates to the fashion industry). Many potential investors will simply tune off if you employ a scattershot approach.
It is also vital that you make adequate research concerning potential investors. Ensure that you have information about previous businesses they have invested in. Try to know the process of selection and seek to use this knowledge to your advantage.
Step 2: Network
The potential investor will likely want to have a measure of interaction with you even before you formally meet with them. Thus, give them open communication channels so that you will have a good relationship with them even before your formal presentation.
Step 3: Prepare and Deliver a Remarkable Presentation
Your presentation is arguably the most important component of your pitch. Hence, adequate preparation is vital. During the presentation, take note of the following points.
- Be concise and straight to the point. Do not ramble or fumble your words. Do not beat around the bush, you are probably going to be given just a few minutes to present, thus making the time count.
- Talk about the risks of the venture and financial aspects. They are investing money into your business, let them see how the money will be spent and your financial projections.
- Deliver an engaging presentation. Get them involved
- Get ready for questions both before and after your presentation.
- Speak confidently, using great tone, body language, and other communication skills.
It might not be easy finding funds for your business from angel investors, but the points in this article can be helpful in securing the funding you will need for your business from angel investors.