As a startup founder, approaching an angel investor is one of those financing options that will come into conversation sooner rather than later. I’ve previously written about angel investor pros and cons, and the bottom line is that angel investors bring a lot of good stuff into the relationship, most importantly their experience besides the obvious greens. Many are entrepreneurs themselves who have largely been through what you’re about to go, making their advice indispensable.
However, getting through to them and making your pitch is rarely straightforward. Speaking from experience, limited as it may be in this particular case, here are 5 steps on how to find angel investors and get your business off the ground.
1. Comb through online properties
A bunch of good things started with a simple online search and meeting angel investors is no different. The good news is there are plenty of online platforms to go through. While it’s a term that covers quite a bit, in this particular case online platforms refer to directory-style websites that help entrepreneurs connect with angel investors via the magic of the Internet.
Angel Capital Association (ACA) is arguably one of the foremost resources for entrepreneurs in North America, featuring 14,000+ accredited angel investors, 250+ angel groups and platforms, and various filtering options, including regional sorting. You should also check networks like Gust and Angel Investment Network that connect the entire startup ecosystem and bring together startup owners not just with the necessary capital but also with contacts and knowledge.
Angel group FundingPost has over 8,000 angel investors and venture capitalists who operate on a global level. There is also AngelList, a popular platform for startups where you can browse individual angels, among other things. It’s important to remember that every site has its own rules and requirements for connecting with angel investors so pay attention.
Conducting an online search will open many doors (I’m trusting you’ve googled “how to find angel investors”) but one other thing you might try is searching on LinkedIn. As THE social network for professionals, a quick search will reveal 83,539 results (at the moment of writing) for ‘angel investor’, featuring people, companies, and groups. Not all of them will be relevant but going through these can help you identify and find an angel investor. Once you do that, you can network to get a warm introduction (more on that in a minute).
Also helpful are LinkedIn groups that have a focused group of members, whether it’s entrepreneurs like yourself or investors.
2. Frequent angel investor events
Being live at the scene is a rare opportunity to get in front (literally) of angel investors who are actively looking for the next business to invest in. Some of the online platforms mentioned above like FundingPost even arrange events so entrepreneurs can meet potential investors face to face. StartupGrind has a neat list of events but generally speaking, Google is your friend (as usual) in discovering if there is anything happening close by. You can also try meetup.com or eventbrite.com.
3. Ask around locally
It’s a good idea to start shopping for names in your immediate vicinity as a good chunk of angel investors lean toward investing in local markets. Not only do they have a better idea of local affairs but being close geographically offers them a chance to have a more active role in the development of the lucky startup.
By asking around, I mean just that: see if anyone in your family or group of friends is looking to invest (not unheard of) or has someone among their contacts list who is or might help facilitate the connection. Check with your local business development centers, hubs, and communities, which brings me to:
4. Word of mouth
Being referred to is probably the best way to find angel investors, even if it’s one of the harder ones. While angel networks and groups are an efficient way to get in touch, they are also available to everyone else, meaning angel investors are blasted with pitches, questions, and proposals left and right.
They are far more likely to listen to you if you have been referred by someone they trust, know, or have had business dealings with in the past. It’s a rule of thumb: warm connection is always an advantage when looking for financing as investors are more willing to invest in people they know rather than in those they don’t.
Referrals are closely related to the next point:
5. Leverage the power of networking
Finding angel investors directly is tough because some of them tend to keep their profession for themselves in order to avoid constant hassling. It’s worth asking your industry peers (especially if they have previous experience with angels or raising money) about advice, process, and finally – a name or two.
But there’s far more to networking than simply reaching out and meeting more people. To maximize your chances, you need to be smart and search for “hidden” details.
Here’s what I mean by it. How to find angel investors online can be solved as easily as searching for businesses similar to yours that have been sold recently (or scored major funding). You can reach out to the now rich founder and tap into their experience for various roles – partner, advisor, and even investor. They’ll be in a perfect position to fulfill each of those but if not, at the very least he or she may know others that would so you can ask for references.
As with every type of reaching out, both offline and online, you need to establish a certain level of credibility before posing the investment question. And that leads me to my final piece of advice:
to fully leverage the power of networking, use it for honest reasons.
I’ve always maintained you should look past your interest. Networking can be a very healthy and productive tool if you don’t pursue it for ROI-related reasons. In fact, I’d call it a way of life because it’s your name and brand as an entrepreneur that is at stake. Being an honest and genuine person networking-wise, you can gain friends while continuously showing interest and passion for what you do. Sure, you can’t know if or how the dots will connect at the end of the day but it can’t hurt to try and be the best version of yourself, can it?
Figuring out how to find angel investors for your startup shouldn’t be that hard if you know where you’re looking. Having them on board is a different story but getting your foot in the door is the first step to success. For some, that proves to be an insurmountable obstacle – I’m confident this information will help you avoid such a scenario.