How to Find Angel Investors for Your Business?
Attracting angel investments is a long and complicated process. You will have to go through many meetings to present an idea, various verification procedures and approve the terms of agreements.
We at Sannacode have gone through this procedure ourselves, so we recommend that you immediately look for the right investor with expertise in your industry. People with similar backgrounds and interests quickly become allies.
In this article, we have prepared information on how to find angel investors with links to angel investors’ websites.
Who are angel investors?
Angels are investors who provide financial and expert support to young entrepreneurs in the early stages of a company's development. This support gives startups the resources they need to translate an idea into reality initially.
Business angels invest their funds in exchange for a significant stake in the business and a powerful voice in management issues. The main goal is to find a promising startup that will subsequently grow up, and the angel investor will be able to sell his stake and make a significant profit.
For the first time, they started talking about "angels" at the beginning of the twentieth century in the theater circles of New York, when it became popular to finance new productions among the capitalists close to the then theatrical bohemians. Not all of their theatrical projects were profitable, but this did not diminish the number of people willing to invest. Over time, these angels realized the economic value of their investments and expanded their investment directions to other areas.
Thomas Sanders and Gardiner Green Hubbard, who invested in Alexander Bell's telephone company in 1874, were angel investors, although they were not named. A few years later, when the company found commercial success, the investors successfully sold their stake. We are talking about the transnational communications company AT&T Inc, the largest provider of both local and long-distance communications in the United States and the second-largest wireless service provider in the United States. More recent history also knows the successful investments of business angels at the initial stages of creating companies: the first investor of the future tech trendsetter Apple was Richard Kramlich, who invested $ 22,500.
How to find angel investors?
Step #1. Self-identification
Business angels are needed by startups that have invented something new and received a patent for a new product or service. The concept of an innovative product is much broader. It doesn't have to be a technical invention. It could be a fresh look at what already exists. For example, a cafe with exceptional service or a car wash can become an innovation. It is necessary to answer the question: what is new in the proposal, what are its advantages? Therefore, you need to do minimal marketing research to help you understand the market. The means can be different: from empirical knowledge to searching on the Internet.
Step #2. Product audiences
You need to decide on a portrait of the ideal buyer for your product. How vast is the market for the product you are offering? Business angels are interested in highly profitable projects with more than 29% per annum. Otherwise, they are unlikely to take risks. Perhaps the algorithm you proposed can be bought by large companies. But looking for them can take a long time. Another option is to make, for example, a software product and burn it to disk. Accordingly, the customer audience for your product becomes much broader.
Step #3. Team
A business angel has some experience, and he will help in the implementation of the project, but the investment seeker needs to have a team of at least two people. If an investment seeker offers a new approach to a product or service, then, as a rule, an experienced manager is behind the project. If the applicant provides an invention, then there should be a manager next to such a person: no matter how brilliant the idea is, it must be correctly implemented.
Step #4. Business plan
You can draw up a business plan yourself or order it from a consulting firm. The cost of the service will cost $ 1-5 thousand. The business plan should contain: the name of the project, the description of the product (should pay special attention to the independent research carried out and their results), the stages of product development, the estimated price of a unit of production, and the cost of its production, as well as the main functions of the product. The market description should include information about the annual volume of the market, its growth rate, segments, and your ambitions to capture market share (as a percentage). In addition, the business plan should contain information about the necessary investments, competitive advantages, and competitors, the management team of your project, the expected share of the investor in the company, the planned return on investment, etc.
Step #5. Pitch
Usually, communication with a business angel takes place at presentation sessions. As a rule, applicants for three or four projects appear at once. It is essential for the 10 minutes allotted for the presentation to tell all the most important and exciting things about the project. Because, as a rule, questions start after the presentation. The presentation should cover all the issues that are discussed in step # 4. The presentation should not be only oral. It is better to prepare handouts and make a PowerPoint presentation.
Where to find angel investors?
Here is our list of United States opportunity sites for researching angel investing and finding your investor or financial partner:
- AngelList. One of the most popular and incredibly successful online resources for finding business angels in Silicon Valley. With the help of it, you will be able to establish connections with US investors.
- Seedcamp. The online platform of the European startup incubator Seedcamp. It allows young startups to find their first investments.
- 37 Angels is a community of more than 50 female investors at the training stage of investment education, and therefore are especially interesting for small business startups as micro investors.
- Alliance of Angels is based in Seattle, Washington, an alliance of budding startup investors; this community provides entrepreneurs and finance and intangible resources and education.
- Angel Summit convenes summits from each region's most visible angels, venture capitalists, community leaders, and corporate innovators to explore the best startup inventions and angel investing in perspective. These summits provide both entrepreneurs and wealthy citizens with great opportunities to “learn the rigging of the ship,” venture capital and private investment, trust partnerships, create an environment for communication between angels and entrepreneurs.
- Atlanta Technology Angels supports already started high-growth businesses at an early stage.
- Broadway Angels, a world-class group of women investors and senior executives with years of experience investing and managing the world's best technology companies, but on this portal, they specialize in small investments in the IT sector.
- Central Texas Angels is a new micro-investor group that has already invested $ 62 million in over 100 startups and is among the top 5 most active angel investing groups in the United States—based in Austin, Texas.
- Future Investor is a great free online angel investing course; here, you can catch newbie investors who have not yet dived deeply in this area.
- Hyde Park Angel Network is a Chicago-based forum for micro-investors-newbies who are determined to invest in small business startups (and more than 100 top investors, the portal's founders, advise them on these topics).
- Maine Angels. They love not only investment but also mentoring companies at an early stage.
- The New York Angels is a community of over 100 entrepreneurs, venture capitalist directors, and other New York business leaders who invest between $ 250,000 and $ 750,000 in early-stage high-tech companies.
- Ohio TechAngel Funds - nearly 300 angels based in Columbus, Ohio; support startups in IT, new materials, and high medical technologies.
- Pasadena Angels - over 100 angel investors from Altadena (an elite holiday village that is a separate part of Los Angeles); invest up to 750 thousand in ideas and startups.
- Pipeline Fellowship is an Angel Investment Boot Camp, a community dedicated to fostering greater diversity in such investments and fostering women entrepreneurs’ socialization.
- Sandhill Angels is a group of successful Silicon Valley executives and investors passionate about commercializing cutting-edge technology.
- SpringBoard is a central web hub for influencers, investors, and innovators helping women build a big business.
- Tech Coast Angels. Nearly 300 Los Angeles-based angels supporting entrepreneurs in technology, biotechnology, consumer goods manufacturing, media, urban development - and internet projects.
Have an idea but don't know how to create a product? You can leave a request on the website, and Sannacode specialists will advise you on how to start developing a technology startup.