This guide will walk you through what angel investors do, how to find them, and what the angel investor pitch process looks like in detail.
Angel Investor Basics
Here, we will walk through the Angel Investor basics from explaining what angel investors are to a simple explanation of how they work.
Angel Investors are a critical source of capital for young startups looking to raise their first round of cash. They tend to invest long before professional venture capital or private equity firms do, with check sizes between $5,000 and $500,000 on average.
The typical Angel Investor is a high net worth individual, often a successful entrepreneur in their own career, that is looking to make personal investments in a small number of deals. Their value to an entrepreneur can extend beyond the check, since a well-connected angel investor can open up doors to potential customers and larger investors as well.
Angel Investor Groups are made up of a number of accredited angels that band together to review new deals and make investments together. Entrepreneurs can benefit by broadcasting their deal to the angel investor group. The group may invest as a whole or individually based on how the individual angel investors feel about the opportunity.
The businesses angel investors fund tend to be local companies that may target industries where they have personally made money before, although that's not always a requirement. These investors want to get an early stake in your company, but they want to have an early relationship with you personally so they can see the company build traction before they write a check.
Find Angel Investors
Looking for Angel Investors starts with three primary criteria; industry, location, and stage. Depending on what industry you are in, your location, and the stage where your company is at will determine the angel investors you will want to talk to. Here, we will discuss how to target particular angel investors by targeting your search, researching their portfolio investments, and finding out where they get their deals from.
Using an Angel Investor Network
Using an Angel Investor Network can be a very effective way to connect with angel investors. You will want to group the firms according to your needs and use the network to contact the angel investors. Using an angel investor network can give you and your opportunity added credibility.
Using an Angel Directory
An Angel Directory is simply a site or publication that provides a list of popular angel groups. Angel Directories can be useful as a starting point to help narrow your search and focus in on the angel investors you want to target for investment.
List of Angel Investors Groups
Angel Investor Groups exist all across the country. In fact, there are likely Angel Investor Groups in your city that you should evaluate for investment. Angel Investment Groups often favor local deals so targeting groups close to you will give you a leg up.