How to Raise Money From Angel Investors?
Knowing how to raise money from angel investors is important for anyone looking to start a business that requires a lot of capital.3 min read updated on February 01, 2023
Tips for Raising Money From Angel Investors
While there is no precise formula on how to raise money from possible angel investors, some tips to remember include:
- Don't be afraid to get started: You will never get an investor if you don't reach out to them. Remember, getting an investor is a networking game where the number of connections you can make will pay off.
- Always know your audience: Consider the angel investor's perspective and pitch to them as though you are answering what you know they need to hear. You may have a revolutionary product, but they are probably more interested in a possible return on their investment.
- Don't be afraid to dress it up: Always be honest when performing your pitch, but instead of just focusing on the nuts and bolts of the investment, add a little flair. Include visualizations and graphs that can jazz up your presentation to keep the investors interested and make it more appealing.
- Take the time to build long-term relationships: If an investor is going to give you a significant amount of money, they will need to have trust in you. No matter whether they invest in your first idea or not, continue to cultivate that relationship. They may just want to get to know you better, and you never know where a strong foundation can take you.
- Find yourself a champion: Since you may not have time to build the needed trust with your angel investors, they will often turn to trusted friends or others in the industry to vouch for you. Make sure you have cultivated relationships with people who will support you and champion your cause around investors.
- Use available platforms: There are multiple platforms around that can connect entrepreneurs with potential angel investors. By accessing these communities and networks of angel investors, you can save a lot of time and research looking for investors who might be interested.
- Provide as much information as possible: While you may not have the amount of data that you would like when pitching investors, it is important to gather as much data as you possibly can. Angel investors know that they are taking a risk, but they hope that they will still want to calculate that risk as much as they can.
How to Raise an Angel Funding Round
Once you have done your research and have your business prepared to take on investors. You will need to raise an angel funding round. To get started, you can consider:
Securing Funds From Family and Friends
Not all entrepreneurs have this available to them, but friends and family can be a great place to start when looking for initial investors. They not only have established trust with you, but they are likely to be supportive of your endeavors and may be easier to work with than investors you do not know.
Put Some of Your Own Skin in the Game
If you do not put any of your own money into your business, you could be sending the wrong message to potential investors. It not only shows a lack of commitment but also maybe a lack of belief in how well the business will succeed. If they have put in all the money and you have in none, then you would have very little to lose except for some pride and your time.
Put the Work In
It is up to you to transform your business dream into reality. To be able to get angel investors excited and interested in investing in your business, they will want to know that you have not only put in the work to get your business started but also will continue putting in the work. This means doing research and being prepared to answer questions regarding:
- The industry
- The market
- The product or service you are offering
- The competition
What Is Angel Funding?
Angel investors are typically investors sought between the stage of self and family funding and seeking out venture capitalists. These are typically considered non-professional investors who enjoy investing as a hobby or an interest and are willing to take a high risk in exchange for a portion of equity in a company in which they may see potential.
If you need help with how to raise money from angel investors, you can post your legal need 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.