What is an Angel Investor?
What is an Angel Investor?
An angel investor (or business angel) is a private investor who invests in small businesses or start-ups. Angel investors are often former entrepreneurs who invest their assets in the Pre Seed, Seed and/or Growth Capital phase. They would like to outsource their assets to give new companies a chance. Because of their background, business angels often have a lot of experience in entrepreneurship and a large network, which they can also offer to the start-up. angel investor However, angel investors – due to their entrepreneurial past – are often aware of the additional risks of startups and small businesses. Therefore, angel investors often demand a high return on the invested capital. In addition, it is common for Angel Investors to provide the capital in exchange for shares.
How do Angel Investors work?
Angel Investors generally invest in companies that they have a lot of knowledge about. So for example: an angel investor who previously worked in the software sector will now also want to invest in a company that is active in the software sector. Angel investors often step in early in the life phase of a company. Hence the term ‘Angel’: they help start-ups where it is difficult to find financing. Often angel investors are interested in the brains behind the company. It is therefore very important that you as a founder show why the angel investor should invest in your company. In addition, angel investors naturally also look at potential, competition and the service or product itself. How do you find an Angel Investor? The most important thing when approaching potential angel investors is that they need to learn more about you and your company. The most common way to do that is to make a pitch deck. A pitch deck is a short and clear explanation of the added value of your company. Make sure you get the angel investor excited and a first meeting will take place!
Tip: Angel investors like to invest in an entrepreneur they like, so be yourself and show your passion for the company.
For which companies are Angel investors suitable?
Angel investors are most suitable for companies that are not only looking for capital, but also network and knowledge. Also read the article about venture capital for startups.
6 tips to impress an Angel Investor:
In addition to the above information, we would like to give a number of tips to be well prepared when you start looking for an Angel Investor.
Be visible. Investors are always looking for new investment opportunities, so make sure you can be found. For example, register with platforms or participate in entrepreneurial competitions.
Don’t seem desperate. Tell your future plans, which very coincidentally require money. But don’t get too dependent on the possible investment.
Make a post ‘unforeseen’. When a company is in the startup phase, there is a very uncertain period. Angel investors know that predictions about growth at this stage are difficult to estimate. Therefore, provide a broad estimate of the investment need and make it known that unforeseen costs have been taken into account.
Be proud of your team. Angel Investors want to see that they invest in a company with a good team. They must gain confidence in you. So show why you form a good and complete team with the necessary knowledge and experience. But, don’t be arrogant. This will deter and for you 100 others in line for an investor. Do you lack certain specific knowledge/experience? Then emphasize how this will be solved in the future.
Be scalable. Angel investors, and investors in general, want to see that there is potential to expand abroad. This will limit the risk for the investor.
Be prepared for critical questions. Investors will ask dozens of questions to get the best possible picture of the potential of their investment. So be prepared for questions about, for example, growth, future and worst case scenarios. However, you will undoubtedly get questions that you are not prepared for. Don’t panic, this can always happen. In this case, indicate that you still need to think about it and will come back to it later. This comes across as professional and won’t give you vague answers.
So, is an Angel Investor exactly what your company is looking for? Register now via our entrepreneur form and get in touch with our investor network of Angel Investors, among others.