If you’re an aspiring entrepreneur or businessperson, you’ll know first-hand just how vital it is to get the right funding for your business. 

Having a strong vision for your business is essential but it’s no secret that getting a business off the ground takes money. Although many entrepreneurs are happy to invest their own money, the large sums needed to turn an idea into a business can often require external investment. In this case, there are numerous options open to entrepreneurs; you can approach a bank, a venture capitalist firm or an angel investor for investment, each having its own pros and cons for your finances and business.

 

I’ve previously discussed things to consider when looking for an investor on the site and want to focus, in more depth, on angel investment. In this blog, we’ll be discussing all things to do with angel investors, from the basics to how to find a reliable investor.

 

What Is an Angel Investor?

Also known as a private investor or angel funder, angel investors are individuals who offer start-up or early stage companies financial backing in exchange for business equity or royalties. Often business owners and entrepreneurs themselves, angel investors can provide business advice and connections, as well as the funding you require. Angel investors can make a one-off payment to help get the business off the ground or offer up cash injections at various stages to aid with development and growth capital.

Often the preferred method of investment for entrepreneurs, angel investors set themselves apart from other, more formal investment options, such as venture capitalists, in a number of ways:

 

Angel Investor

• One, high-net-worth individual.
• Use their own money to invest in fledgling businesses.
• Often offers smaller investments.
• Make investments to help start-ups get off the ground.

Venture Capitalists

• A firm that makes investments.
• Pools resources from financial businesses, insurance companies, and corporations.
• Has the capital to make large investments.
• Makes investments to get a good return.

 

What Are Angel Investors Looking For?

Generally speaking, angel investors are high net-worth individuals with a surplus of funds. Whilst making investments can be risky, investing in start-up businesses can often provide a greater return than typical investment routes. In this sense, many angel investors are still looking to get a return on their investment; they are often successful business people themselves.

Unlike other investment types, however, angel investors will often provide more favourable terms, investing in the entrepreneur themselves rather than the viability of the business and offering both financial and expert support to help get the business off the ground.

 

Pros and Cons of Angel Investors

As with all things in business, it’s important to know the pros and cons of a business move before you make the decision.  Indeed, whilst angel investments can be a favourite amongst start-up business owners and entrepreneurs, that doesn’t mean it doesn’t have its downsides. Here are the main pros and cons of angel investments that you should definitely consider:

 

The Pros

• Angel Investors are willing to take risks– With surplus funds at their disposal, Angel investors are often willing to take financial risks that banks and venture capitalists would never dream of. This means that businesses or people that would normally be turned down by banks still have a chance of winning over an angel investor.
• The funding is not a loan- Unlike bank loans, you probably won’t have to repay the money that’s invested- you’ll be giving away equity instead. This makes it relatively low risk for you; if the business fails, you won’t be left with insurmountable debt (your angel investor may have an exit strategy, however)
• Angel investors offer more than money– Angel investors are often successful entrepreneurs and business people themselves. This means that they can bring more than money to your business, offering years of experience, established networks and expert knowledge to help you succeed.

 

The Cons

• Angel Investors can expect more- Given that there’s a lot of risks involved in angel investment, some investors can set the bar high when it comes to the expected returns. This can amp up the pressure for you and your business to succeed.
• You have to give up equity- In exchange for offering the finances you need, your angel investor will expect some business equity in return. This ultimately means your giving away a part of your company, as well as a portion of any future profits.
• Your angel investor will want a say- After taking a risk and investing money in your business, your angel investor may want to have a say in some of the bigger decisions regarding your business and its future.

 

How to Find an Angel Investor

If you’ve decided that an angel investor is the right path for your business, the next step is to find an investor that suits your business. It’s by no means an easy process and competition can be fierce; angel investments are frequently sort after by entrepreneurs and business owners. Here are a few of my recommendations to help you find an angel investor.

• Get Networking

Networking is important for any businessperson, but especially for an entrepreneur looking for an angel investor. Whether you’re looking at your existing network or expanding out in your industry, both in-person and online networking can help you form connections with people that might be willing to invest in your business or idea- or can introduce you to people that can.

• Be Ready to Give up Equity

Many angel investors will be willing to provide the financing your start-up needs in exchange for equity. The equity your investor seeks will vary depending on the amount and individual. If you’re not able to, or not prepare to relinquish any equity of your business, angel investments may not be the best option for you.

• Utilise the Internet

These days, we have the ability to reach out to people across the world using the Internet. If you’re struggling to find an angel investor within your business network, you may want to use one of the many platforms available on the Internet to find a potential investor. As usual with the Internet, however, it’s vital to do your due diligence to avoid becoming a victim of scams or fraud.

• Refine Your Pitch

Ensuring you have your pitch nailed is absolutely essential. Whether you’re at a networking event or pitching to potential investors, you need to be able to sell your business and yourself in both a succinct and detailed way. Knowing your business and wider industry inside out will mean that you can pitch with ease to anyone, at any time, so you’re always prepared if you have a chance to win over an investor.

 

Are You Looking for an Angel Investor?

If you’re looking for an angel investor, then I’m always on the lookout for my next investment opportunity. Let me tell you a bit about myself.

Hi, I’m Matt Newing, businessman and entrepreneur. I’ve always had a passion for business and started out selling second-hand bicycles when I was at St.Helen’s college. From there, I was lucky enough to complete the Prince’s Trust Enterprise Programme and receive funding to set up my tech company, Elite Group.

I’ve since expanded my business portfolio into various areas such as property, data, SaaS and security, as well as minority and majority stakes in various public and private sector businesses. Investing in promising businesses at the ground level is one of the main ways I grow my profile. As such, I know my stuff as an investor and have helped various businesses grow and develop into the successful companies they are today.

If you’re looking for an angel investor then feel free to get in touch with me here.

 

Matt Newing is a self-made entrepreneur, investor, and philanthropist who’s always on the lookout for the latest and greatest business opportunities. If you have a business that needs taking to the next level, get in touch with Matt today.