Who is an angel investor - how to find an angel investor for your startup

Learn who angel investors are, the benefits they offer, and how to find one for your startup. Get insights on early-stage funding, networking, and securing the right investor.

An early-stage startup might need support at some part of its journey. Some startups have a brilliant idea that could disrupt the industry but they need funding and a nudge in the right direction to keep going. This is where angel investing comes in bringing in solid investment that can help the business take off. With proper financial backing and mentorship a start up can reach its full potential. However, you first need to know everything about angel investment and then decide whether it is the right choice for your business. Read on to learn who are angel investors? and how to find angel investors for startups?

What is an angel investor?

An angel investor is someone who provides start-up’s their first round of funding in exchange for a stake in the business. Angel investors can be entrepreneur's friends and family or they can be involved in many businesses professionally. An investor's engagement in getting a product to market can take the form of a one-time seed investment or a continuing stream of funding. Typically, angel investors do not work in the credit industry. These investors invest with the understanding that they will only earn profits if and when the company succeeds.

Also read: How to start a business in India?

What are the benefits of angel investing?

There are various benefits of getting angel investors for startups. They are as follows:

• Provide financial assistance: It is a risk-free, collateral-free source of capital that usually comes when it is most desperately needed.
• Offer business expertise: Since these investors are highly experienced they offer financial support and business management tips to inexperienced founders.
• Opens doors to networking opportunities: They bring in a wide network of potential partners, customers, suppliers, and other key stakeholders that creates opportunities for early-age startups.
• Increases credibility and validation: Securing an investment from a reputable angel investor shows other investors, customers, and stakeholders that the business is backed up by an experienced professional.

What are the setbacks of angel Investing for a startup?

While angel investing can be a great way for startups to secure funding, it also comes with some drawbacks. One of the disadvantages is that startups may end up giving away a huge portion of their ownership in exchange for funds. There is a fear of losing control over the business, as angel investors often want a say in key decisions. Since angel investors are taking a big risk by investing in an early stage company, they may demand high returns and put pressure for positive results.

Another challenge is finding the right investor for the business as not all angel investors offer the right guidance. If the vision and expectations don’t match it can create problems in running the business. While angel investors typically provide smaller funding compared to venture capitalists, relying entirely on angel funding could limit the startup’s ability to grow in later stages.

Also Read: Stories of top young entrepreneurs in India

What’s the difference between an angel investor and a venture capitalist?

Large sums of money collected from several investors are invested by venture capitalists. They usually only put in money in companies that are already up and running and have the potential to make a significant profit. On the other hand, angel investors are a distinct kind of people who want to invest their own capital in great ideas while they are still in the early phases of developing into profitable companies. They invest with the intention of turning a fantastic idea into a reality, these investors are usually investing their own money.

How to find angel investors in india?

Finding angel investors in India can be a key step for startups looking for early-stage funding and mentorship. Here are some practical ways to locate them:

1. Startup networks: Online platforms like AngelList India, LetsVenture, and Indian Angel Network help connect startups with investors. By joining such platforms you can pitch your business to a wide range of angel investors.

1. Networking events: There are numerous networking events set up where you can pitch competitions, and conferences. These gatherings are excellent opportunities to meet potential investors in person and share your ideas.

1. Incubators and accelerators: Many incubators and accelerators in India, such as Seedfund and CIIE.CO, have close ties with angel investors. You can be a part of such programs and get noticed by your potential angel investors.

1. LinkedIn and Social Media: Social media platforms like LinkedIn allow you to connect directly with angel investors. You can pitch your business to active investors on social media platforms and get the funding you require.

1. Referrals: Seek introductions through mutual connections or industry experts. A referral from someone trusted by an investor can increase your chances of getting noticed.

Also read: Successful women entrepreneurs in India

Conclusion

The right angel investor can be of great help for your startup’s success. You need to attract investors that are aligned with your business goals and ensure your business plan is solid. As your business grows, having a flexible and professional office space becomes crucial. WeWork offers dynamic office solutions with fully equipped workspaces, perfect for startups looking for a flexible workspace and networking opportunities. With WeWork, you get access to a vibrant office environment, meeting rooms, and collaborative spaces that can help you connect with like-minded entrepreneurs.

FAQs

1. Who are angel investors?

Angel investors are the type of investors who provide financial support to startups. They make investments through their personal funds in exchange for equity or ownership in the company along with money. The investors also offer business advice, important networks which are crucial for business growth.

1. How to find angel investors for a startup?

Online platforms like AngelList, Indian Angel Network, or LetsVenture are the right place to connect with potential investors. You can also attend networking events and conferences for startups that allow entrepreneurs to meet investors in person. Social media platforms like Linkedin are a great place to connect with active angel investors.

1. How much do angel investors invest?

As angel investors use their personal funds their investment may vary from one to another. Typically, angel investments range from ₹5 lakhs to ₹2 crores, depending on the startup’s potential and the investor’s capacity.

1. What stage of a startup's development do angel investors typically invest in?

Angel investors usually invest in the early stages of the startup’s journey. This means the business might be in its seed or pre-seed stage. Usually, these businesses might just have a prototype or early version of their product but don’t have a firm foundation or financial backing. Angel investors come in before venture capitalists and help startups grow by providing funding and business expertise.

1. What are the risks of angel investing?

Angel investing comes with high risks, these investors will push startups to grow faster and show positive results. During the initial pitching stage they might demand for more shares or profits, demanding full control of all the decision making in the business. Angel investors also face uncertainty because of how new the business is, but some investors are willing to take these risks.