Fundraising Mastery: Angel Investors

n our last two newsletters, we looked at debt funding and then started on equity funding with a review of crowdfunding. Now it’s time to step up a gear and look at angel investors. The sums are greater, the investor involvement is higher, and it is slightly trickier to access, but the payoff from a successful relationship with an angel investor can be huge.

Typically, angels operate in networks and several members will team up to make investments in qualifying companies, usually up to $500,000, but occasionally much more. Angel investors tend to be wealthy individuals who have a background in business and investment. Often, they are entrepreneurs themselves who have sold a business and want to invest their money in companies they perceive to have a good trajectory for growth. It’s not just about the cash, though; angels will get involved in the strategic decisions of your company, lend their expertise and open their book of contacts to your business.

Chances are you’ve seen or at least heard about TV shows like Dragons' Den or Shark Tank. The people who sit back and listen to entrepreneurs pitching to them are angel investors, although in real life, you won’t be pitching to people who have stacks of cash on the table in front of them. Make no mistake: angel investors have the money as the syndicates vet them before they can join, but the piles of cash are just for the TV cameras.

Unless you know someone who is an angel investor, you may be wondering, ‘Who are these people and how do I make contact with them?’ The first step is to ask people in your network if they know anyone suitable. Perhaps you have a friend who works in a law or accountancy firm. Those firms are often involved with business deals and your friend could make an introduction, either to the angel or to a more senior person in the firm who has dealings with angel investors.

A good place to start is with a Google search. This might point you to a trade body like the UK Business Angels Association (www.ukbaa.org.uk ), the Angel Capital Association (www.angelcapitalassociation.org ) which covers North America, Business Angels Europe (www.businessangelseurope.com ) or something similar wherever you live. If you can’t find anything locally, I would start with the World Business Angels Forum (www.wbaforum.org ).

LinkedIn is another great place to find angel investors. You can search for people who have ‘angel investor’ in their profile description – a search I did just now came up with 53,000+ results, so you may need to narrow your search criteria a little. Read their profiles to understand if they are the right person for you to connect with, and if so, reach out and connect.

Attend angel investor events. You can often find them through the sites I’ve noted or search for them on meeting information sites like Meetup or Eventbrite. You can also do some deeper research. Look out for news in your industry or your local area about businesses which have recently been sold or have secured investment. Reach out and make contact with the owners.

Many angels operate through networks as opposed to on their own. Networks are formed of a group of angel investors and typically have one person who acts as the coordinator. This individual may or may not be an investor, but they are of critical importance as they are the gatekeeper to the network. Find these people and build a relationship with them.

Done correctly, investment via an angel can propel your business towards great success and help you achieve the growth of your dreams.

As always, looking forward to reading your thoughts and questions in the comments.?

With love and gratitude,

David