Corporate Angel Investors: Everything You Need to Know
Are generally executives who have taken early retirement or been downsized and are hoping to turn their investment into a paid position with a new company.3 min read
Corporate angel investors are generally executives who have taken early retirement or been downsized and are hoping to turn their investment into a paid position with a new company. Attracting a corporate angel investor could help your business achieve the capital it needs to get up and running.
Types of Angel Investors
Aside from corporate angel investors who bring their company experience to the table, there are a few other types of angel investors worth noting:
- Entrepreneurial angel: An individual who has their own successful company who is hoping to invest in another business that aligns with or benefits their own
- Micromanagement angel: Someone who invests a large amount of money in a single business for the purpose of controlling as much of its operations as possible
- Enthusiast angel: An older, independently wealthy investor who invests as a hobby and tends to finance smaller amounts of money in a variety of businesses without becoming involved in any of them
- Professional angel: A person employed in a professional capacity, such as a lawyer, doctor, or accountant, who invests in businesses related to their area of expertise; these investors may also provide professional services to the company at a reduced rate
- Family investor: A supportive family member isn't technically a classic angel investor, but this person's motivation stems from wanting to see you succeed
- Relationship investor: A business colleague or former co-worker who has experience working with you and wants to support your new endeavors while also looking for a financial return
- Idea investor: A person who is familiar with your industry and can validate your business ideas
- Once-removed investor: Someone connected to you through a professional or personal relationship with any of the above investors, but who does not know you personally; this type of investor trusts the others investing in your company
In addition to these common types of angel investors, there is also the archangel — an investor with a proven track record of making other angel investors money. Archangels have built successful companies on their own or have impressive contacts with multiple investors, making them valuable, influential investors.
How to Find and Attract Angel Investors
Learning to recognize the different types of angel investors is only the beginning. The next step is knowing how to attract them to obtain the financing your business needs.
Small business owners looking for financial help often turn to individuals looking to invest in startup opportunities. After tapping out your personal savings, as well as your friends and family, angel investors are the next best source of funding. A good place to start tracking down angel investors is through industry associations or local trade groups. Your state may even offer business incubator centers that help entrepreneurs find angel investors. Many angel investors invest through networks that provide extra research, due diligence, shared expertise, and access to potential deals that a single individual doesn't have.
Do your homework before approaching a potential investor. For example, if you're opening a clothing retail shop, approaching a biotech investor won't get you anywhere. Stay focused on pitching your idea to investors interested in your niche.
Most angel investors are incredibly thorough and won't offer you the money quickly, even if they're interested in your idea. In some cases, it could take several months of meetings with various groups and individuals before you're approved. This is because angel investors essentially own a part of your business, so they need to know what kind of clout they'll have in decision-making.
Remember, angel investors are usually former business owners themselves. More than offering financial help, these investors are also great sources of knowledge and industry experience. You want to work with investors whose vision and interests align with yours.
How to Pitch Your Idea to Angel Investors
When delivering your pitch to potential investors, try to stand out from the crowd. Come into the meeting with a solid business plan and financial projections, but also wow them with an engaging PowerPoint presentation. Include slides demonstrating your pitch's key points. Also, have an investment summary available to hand out after the initial pitch and Q&A session. The summary will serve as a refresher that covers all important points of the presentation.
If you need help finding corporate angel investors, post your job on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.