Angel investors are a significant part of the startup ecosystem. If you are an aspiring entrepreneur or founder of a young startup you may be thinking about fundraising with angel investors. Here’s what you need to know…
Angels are a key element and building block in starting fundraising. They can be one of the most critical sources of funding for startups. Before you rush out there with your new pitch deck to try and present to them, make sure you understand how they fit, what drives them, and what’s next.
What Are Angel Investors?
Angels are investors who invest in startup companies as capital partners. The term refers to individuals who participate in funding new companies and business ideas. However, we have also seen a substantial rise in the number of angel groups. These are groups of angel investors who all invest together for efficiency, impact and lower risk.
If your startup needs any funding at all, then angels are going to be an essential part of this. Make sure you’ve got a handle on them before you try putting a business plan in front of them. Below is a video where I explain in detail how angel investors and angel groups work.
Angel Investors: Where They Fit In
If this is your first time raising money for a startup, then it is important to know that you don’t just land all of the money you need in one lump sum.
Even the tens and hundreds of millions you hear about others raising in the news and on tech blogs are just temporary financing to get through the next few months ahead. So, this is a critical step for your success. Everything may be riding on it. Yet, to put it in perspective, it won’t be your last round.
Angel investors are early-stage investors. They will be among your first investors. They may be participating in your friends and family round. They might be your friends and family. Or they’ll come in just after that to provide a bridge to your next early rounds. This is partially due to their appetite for investments, level of sophistication and desire for returns, what drives them and their check sizes.
Angels may participate from the seed stage to Series B of your business funding rounds, though they may already be effectively priced out by your Series A due to the amount of money you are raising at that time.
Who Are Angel Investors
In many cases, you might feel like they are actually angels. Especially with the passion you have for your project at this point, and after spending months shopping for funding.
These individuals may include:
1) Personal contacts, friends, family and their friends
The easiest people to raise money from (especially in the early days) are personal contacts you already have. Friends, family, their friends, past coworkers and bosses, and college buddies. People you already know. People who know you. People you have a relationship with. You don’t just want their money. You want to bring them along for the ride and to enjoy and participate in your success.
They can also be the most forgiving and patient when things are going slow and not as planned. You also have the advantage of knowing how they are and how they react to certain situations.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them