By Esabda
Everyone should consider angel investment for their business at least once during their regular business days. Mostly for small businesses with less capital, angel investors can make a huge impact on their growth. Good angel investors for small businesses are like a big supportive hand while the businesses struggle.
But the most important question that comes to the mind of every small business owner is. How to find an angel investor? How to tell which investor is good or bad for the business? What are the qualities of the right angel investor?
There are many questions that you have while searching for a good angel investor. In this article, we will give you a detailed explanation of how to find an angel investor that is perfect for your small business.
What Is An Angel Investor?
Angel investors are individuals with large net worths who invest in startups, small businesses, or entrepreneurial ventures in exchange for company equity. Angel investors provide a certain amount of funds to small business owners in order to help their business operations. In exchange, investors get a percentage of the business as equity.
To be an angel investor, an individual’s annual earnings should be at least $200,000 over the previous two years. Also, the total net worth of investors should be at least $1 million. In the case of any couple investing jointly, they will require annual earnings of at least $300,000.
Angel investors are most likely to invest in businesses that are in their locality, neighborhood, region, or “domain.” They can invest capital as an individual or be a part of an angel investor network.
10 Ways To Find Angel Investors For Small Business
Finding an angel investor for your small business is quite difficult. But, if you’ve made a decision about bringing an angel investor onto your board. You can start building some good links, networks, and plans, to find the perfect angel investor for your small business.
If you’re having trouble finding a good resource for finding an angel investor, Do not worry! Here we have listed 10 effective ways that will genuinely help you find angel investors for your small business.
1) Build A Solid Business Plan
Before searching for angel investors, building a strong and solid business plan is very crucial for every small business. Do not forget that your small business has various timeline goals and departments that need more capital. Preparing a well-documented business plan that covers every aspect of your business-like goals, costs, target market, and valuations. Creating a solid business plan makes your small business appear more focused and on track. Every angel investor looks for a strong business plan in any type of business before making any decisions. So the first and most important step is to create a solid business plan before searching for angel investors.
2) Start Doing Research
Doing research before going in search of potential investors helps you identify the perfect fit for your business. You can use your network, friends, family, or various online resources to assist you. Some excellent online resources for identifying potential investors include AngelList and Gust. Before they see your business, you take your time to analyze them. This benefits you while pitching and making deals on your behalf.
3) Tap Into Your Personal Network
No one knows about your business more than your close ones. They could be friends, members of your professional network, or former consultants. Looking around you is one of the easiest and fastest ways to find the perfect investment for your small business.
Reach out to friends, family, former coworkers, and mentors who may have connections to investors or be interested in investing themselves. You can have more ideas about the person who has a good amount of wealth to invest in your small business. It has a quite good possibility of getting a qualified angel investor just from your close network, but a good call for it might help you find one near you.
4) Online Angel Networks
For connecting small businesses and startups with potential investors, there are several online angel networks that will help. Using online networks to find angel investors is one of the most popular yet effective ways. There are hundreds of networks that help you make your investment pitch to angel investors. You can easily search for your desired investors and upload your pitch to them using these resources.
Some of the popular online angel networks for small businesses and startups are:
5) Angel Investment Groups
Angel investment groups are groups formed by angel investors who pool their capital and invest jointly in startups and small businesses. It is one of the most effective ways to find the perfect angel investment for your small business.
These angel investment groups are often region-specific, so the initial search for them should be in your area. There are many angel investment groups based on specific industries, and stages that help small business owners by giving funds.
Some of the popular angel investment groups are:
6) Industry Events
Attending various industry-specific events can also help you reach your potential angel investor. There are many industry-specific events, conferences, and trade shows that lead you to potential investors who have an interest in your field. Attending these events provides small businesses with opportunities to network, learn more about industry trends, and mostly showcase their businesses. The more you attend this kind of event, the greater the chance you will end up finding the perfect angel investor for your small business.
Here is an event calendar (www.f6s.com/events/angel-investing) that is happening in various countries that helps small businesses and startups find their angel investors. You can search for any events that are going to happen in your local area, region, and country.
7) Social Media
Using social media creatively and constantly helps you increase your business exposure. Angel investors are everywhere, but depending only on an investment-specific platform might not be a good idea. Social media can also be helpful in connecting your small business with its potential angel investors.
Many small business owners and startup founders use social media platforms like Twitter, Facebook, and LinkedIn to find better opportunities for angel investment. You can use these social media outlets as a voice for your small business goals and achievements. You can display your entrepreneurial journey, accomplishments, and reports. This will build more engagement and work as a bridge between investors and your business.
8) Friends and Family
It is one way that has been effective for most of the famous and successful small businesses. When your business is small and you do not want to take the pressure off some investor who you don’t know well. If you are constant in your business and love what you are doing, Then you don’t need a lot of exposure to get known by your own friends and family. They are well aware of what you are doing from the start.
If you have a good relationship with most of your friends and family then pitching the right ones might be a game changer. There is no better way than to get investment from your closest ones.
ALSO READ: Top 10 Essential AI Applications for Small Business
9) Always Make The Right Pitch
Getting an angel investor is never possible if the investor does not have a clear understanding of your business. Investors want to know your business foundation, target audience, market value, future goals, and past actions. So, making the right pitch plays a crucial role in a better investment deal.
Your pitch should contain all these necessary terms from business information (financial and operational), competition, market, and to regulatory challenges. In the case of putting capital investors needed a clear understanding of your business.
A right investment pitch contains the following elements:
- Business Introduction
- Problems
- Target Market
- Sales and Marketing Strategy
- Competition
- Team
- Financials
- Funding and Investments
10) Local Business Incubators and Accelerators
Many cities and regions have business incubators and accelerators that provide resources, mentorship, and connections to investors. These programs are often affiliated with universities, economic development organizations, or venture capital firms.
Following these incubators and accelerators can also lead you to your potential investor. This provides an opportunity to receive feedback on your small business plan and potentially secure investment.
How To Choose The Right Angel Investors For Your Small Business?
After you get some good responses from a few investors, it’s now time to choose the best among all. Choosing the right investor that fits your business is another important task after finding them. Here are the 4 tips to determine the right angel investor for your small business:
- Always look for a strong experience that can be more helpful for your business type.
- Look for investors who cannot lose their money.
- Always choose angel investors who have realistic expectations of your small business.
- Always choose an angel investor with rational thinking rather than willing to just follow the trends.
ALSO READ: 10 Ways To Find Investors For Small Business
In Conclusion
When seeking angel investors, it’s important to have a solid business plan, a clear understanding of your market, and a plan for how you will use the funding you receive. It’s also important to ensure that you are comfortable with the investor’s expectations, including their level of involvement and ownership stake in your company. Many small businesses have been successful just after getting good investments. Solve all the operational problems and use the fund for the growth of your small business.
