A startup is a long-term process of developing a business from its conception, through research and scheduling, renting or even purchasing premises, hiring employees, bringing in partners, and most importantly, raising funds to sustain it.
The initial times of a business always are the most challenging because of the costly expanse whilst no income. Thus, its founder must find money resources that will ensure the survival of the business.
Excepting the founders' own equity, some potential projects succeeded in the due diligence round of banks that can have a chance to get their loan. However, enough to raise the businesses until getting investment from VC funds, startups need more investments, and most of them come from angel investors’ money.
The crucial role angel investors play in the existence of startups requires entrepreneurs to become familiar with how to find them.
What is an Angel investor?
An angel investor or a seed funder is a high-net-worth individual or organization. They mostly use their own money to fund the startups in the seed or early stage, which is the cardinal phase of building up a business and deciding their fatality, to exchange for convertible debt or ownership equity.
In most cases, angel investors invest in startup companies with a prominent level of risk. They will have to follow those companies' plans for at least 5-7 years to help businesses regain the capital. They often claim a sizable share of the company because the likelihood of failure is extremely high.
Why do startups need angel investors?
Angel Investors are mostly forerunners with pretty experience in one or more different fields. As well as providing capital, they also serve as advisors, providing advice and helping startups to launch successful businesses based on their experience and relationships, especially with investors.
An experienced Angel investor will give valuable advice to start-up businesses, create motivation, and inspiration, and help connect startups with other partners and resources.
Where can startups find angel investors?
1. Friends and family.
Friends and family investors have their flagrant advantage and disadvantage. The plus is these people know you the best to determine whether you are backable, as firsthand references.
However, funding for a startup is precarious, make sure they get prepared that they could lose 100% of their investment. This minus is pretty major: these are your friends and family! It is difficult when mixing personal and professional relationships. And, the fact that only one in 10 startups is successful. It is very likely you will lose all the money invested by your nearest and dearest, and perhaps even them as well.
2. Angel investor network.
Like the family offices, a professional team sources deal for the network screen the Angels and keep their anonymity while comfortably behalf doing due diligence on investment targets. Because of the connection, the amount of funding will be larger.
For example, 100 angels aggregate $100MM to invest in the deals they like best, individually or together, instead of one angel investing $1MM alone.
In addition, it is much easier for you to raise your full amount needed, with one phone call, instead of calling numerous investors individually.
3. Business events
Many startup founders are likely to join in business events to find their angels. It does not matter what the purpose of event is, angel investors would mostly pop-up here-and-there. That could be the corporate event, product launch, Congress, etc.
This is because they all have similarities when they bring people together in face-to-face meetings in order to connect and exchange the ideas or information, which could throw a big chance to open a new potential corporation.
4. Third-wheel company
In reality, even startups can find their angel by networking and coming up with a solid plan that includes a proposal, financials, and a pitch deck. Nevertheless, entrepreneurs sometimes have trouble knowing who to approach because millions of startups are competing for the same amount of money. So, they need a third-wheel company that expertly collects angel investors' data and be the best place to find them.
For instance, Wiziin Inc., a high-quality partner that connects startups and investors. So, how does Wiziin work?
Wiziin has experts, who have high experience in VC and startup fields that can support startups to fundraise successfully. It will be easier for startups to reach investors with the huge data resource collected from investors. Additionally, Wiziin organizes events to give startups a chance to pitch to investors.
You can learn more about angel investing from Wiziin's website. The goal at Wiziin is to provide startups and investors with information and insights that will help them get effortless connections and work effectively.