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Who are angel investors and who to find the right one for your startup?

Angel Investor

An angel investor (also known as a private investor, seed investor or angel funder) is a high-net-worth individual who provides financial backing for small startups and entrepreneurs, typically in exchange for ownership equity in the company. The funds that angel investors provide may be a one-time investment to help the business get off the ground or an ongoing injection to support and carry the company through its difficult early stages. Angel investors are found among an entrepreneur's family and friends.

Angels can come from different backgrounds including corporate investors, venture capitalists, wealthy individuals and members of angel networks. They typically operate as individuals but it’s not uncommon for multiple angels to partner together to form a syndicate when making investments.

An angel investor usually has experience in business or entrepreneurship because they can act as an advisor to the founders of the startup they are investing in. This can be a major help for first-time founders trying to grow a business. There have never been more available resources to find and connect with potential angels. With the world being as connected as it has, listed some of the best ways to find angel investors below.

Several ways to Find Angel Investors

Once you have decided that you want to bring angel investors on board, the next step is to find them. If you are not already connected to a network of startup investors and wealthy people in general, you might not even know where to start.

1. Angel Capital Association

The Angel Capital Association is a group of accredited angel investors with entrepreneurial experience and high net-worth’s to help lead early seed angel investment rounds. There are over 14000 angel investors and it’s a tight-knit community that makes networking even easier for future partnerships. Getting involved with ACA is simple and they provide direct access to a full directory of potential investors.

 2. AngelList

AngelList is the most popular website where startups can go to hire as well as look for investors to partner with for funding. It is primarily goal to serve tech startups or works well as a reliable tool with excellent reach in the industry. You can build the personal profile along with a company profile to get listed in the directory. This will help your startup gain some exposure and be in the right place to look for investors and allow angels to look for you too.

3. Gust

Gust is another reliable angel investor network with a directory of thousands of different startups and accredited investors. These directories help make the vetting process quicker because these investors are already highly qualified to be listed. Nevertheless, you should still do your own research before working with any investors. You can also work directly with Gust and they will assist with determining your best course of action for funding.

4. Angel Forum

Angel Forum is the company that connects startups and investors by building a community to help fund angel rounds. All investors are seasoned professionals with years of experience; you will not be getting involved with any inexperienced angels by using this resource. Angel Forum operates in both Canada and the United States so they have a wide-reaching network available to your startup.

5. Angel Investment Network

The Angel Investment Network is a US-based platform helping to bring startups and angel investors closer together. Investors can find your pitch and contact you directly to eliminate the amount of outreach you need to do. You have access to investors worldwide with exactly 285,542 angel investors available to connect of their directory. After registering you can build a pitch within the platform and publish it live on the site for investors to see. This is a great supplementary option to extend your reach.

Why is angel funding the best funding option for your early stage startup?

Angel funding is a more flexible funding option for early stage startups compared to other funding sources such as VCs and loan funding. In the early stage startup that doesn’t have enough traction to approach VCs or access loans, getting angel funding is the much more suitable funding option.

Angel funding is for high-risk industries

Some entrepreneurs fail to secure VC or loan funding due to the risks involved in investing in some industries such as the energy sector. Angel investors tend to takes more risks unlike VCs when it comes to investing in new startups that are operating in risky industries and circumstances and this might be due to the angel's personal experience and interests working with similar industries before.

Angel funding for building traction

Lack of traction is one of the most common challenges that early-stage startups face during their early funding rounds. Angel investors are mostly working with early-stage startups and so they understand more and more comfortable investing in startups that are yet to make any sales and traction in the market.

Getting angel funding is relatively fast

Angel investors take investment decisions quicker than VCs and any debt providers for that matter; they make a more suitable funding option for early stage startups that are looking for raising capital within a short period of time. Not to mention that the negotiation process with angel investors is faster, flexible and simply compared to negotiation with VCs.

Angel funding provides networking opportunities

In the early stage startup, having good connections with other founders and organizations is very important for opening up growth and expansion opportunities of your startup. Due to their long experience, most angel investors have built strong connections which you can benefit from for the sake of your startup. An angel investor can introduce you to their network of mentors, other investors, incubators, organizations, VCs, and many more.

 

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