How to find angel investors
By Julian Harlow
One way to grow your business is to seek an angel investor who can provide funding for your business. Here’s how to find one.
Creating a startup business is no easy feat, and entrepreneurs who have turned a great idea into the beginnings of a business can be proud of their achievement. However, it also marks the point where many business founders must look for additional funding to allow the business to grow, which can feel like starting an entirely new enterprise in itself. One option for the founder of a new business is to seek an angel investor - a business-savvy individual willing to provide funding for your business, usually in return for an equity stake.
Is an angel the best route for your enterprise?
Before preparing pitches for angel investors, business founders should first consider what other options are available to them, particularly if they are concerned about sharing decision-making responsibilities. Alternatives to angel investors range from approaching family or friends, to changing your business plans so that your growth path is less reliant on additional funds, or even looking at whether your business is a candidate for crowdsourced funding.
Where to start
Having determined that angel investment is worth pursuing, you can start searching for potential investors or investor groups that would be a good fit for your business. Start with your existing business network. Individual investors usually prefer to become involved in local businesses, allowing them to gain and maintain a hands-on feel for the business. Also, many potential investors are not involved in investment groups or networks and may not even consider themselves to be angel investors, but are still interested in funding local entrepreneurs and passing on their expertise. You may even find that your business network includes contacts who can introduce or recommend you to angel investor groups.
Online platforms such as Gust are another useful starting point, allowing entrepreneurs to view angel investor groups around the world as well as the startup businesses that are seeking their attention. Gust and other investment sites will also let you compare how you present your enterprise to other startup businesses.
Australia has seen a number of angel investor groups emerge as the sector has grown, leading to the creation of peak body the Australian Association of Angel Investors (AAAI) in 2007. Searching online platforms such as Gust for AAAI members can provide a good basis for what to expect from angel investor groups, but the overriding factor should be to find potential angel investors that are a strong match to your needs.
What makes an investor a good match?
When searching for possible angel investors, you are looking for somebody who can provide more than just funding. If you are able to outline the areas where your business needs advice or assistance, you are likely to interest investors with skills in those areas. Potential investors will often expect you to be able to identify areas of weakness and demonstrate a willingness to act on advice to address those areas.
Providing a realistic profile of your enterprise when seeking investment should not be seen as underselling your business. You may eventually speak to a large number of investors, so ensuring that you do not waste your time making presentations to investors who were unlikely to be a fit with your business can make a significant difference to your chances of finding an investor.
Make the most of your angel
If you have decided to go down the route of seeking an angel investor, you should work to get the most out of this form of investment. You as the business founder must be willing to work with the angel investor and act on their advice, to the extent that you may have to consider major changes to the business you have built from nothing. Such advice can sometimes be difficult to accept, but it can also be as important to the growth of your business as the funding you sought.