Finding Angel Investors 101: a quick guide to getting your idea funded
Coming up with a great startup idea for Angel Investors often feels like a dream come true. However, reality kicks in quickly: while fresh ideas provide a great foundation for new beginnings, obtaining sufficient funds is necessary to really get the ball rolling. Very few people can afford raising a business on their own, which means once you have that amazing concept sorted, you will likely need to think about finding capital.
The good news is, there are quite a few ways to raise funds for a startup. However, the competition is high, so first, you will need to…
Figure out how to present your idea to Angel Investors
Remember that most investors get pitched daily, meaning you need to stand out to get noticed! Before you start looking for investors, prepare the following:
- A business plan, including your marketing strategy (you’d be surprised how many entrepreneurs ignore this crucial step). Your business plan should clarify what you’re trying to achieve, and what makes your idea unique.
- Demonstrate knowledge in your niche industry – make sure to research your prospective market and relevant trends.
- Get your financial documents ready, as reputable investors will likely demand those. To put it simply, these documents must clearly outline how the business intends to make money – that’s what your prospective investors are here for, after all.
When all supporting documentation is ready, it’s time to consider potential funding sources for your project – and we have a few ideas for you to pick from!
A cheat sheet of potential Angel Investors and other funding sources
- Venture capital. Contrary to popular belief, venture capital companies are not always sharks looking to take advantage of entrepreneurs. Reality is, venture capital firms are, above all, just that – businesses. This is exactly why they often won’t take on potentially risky or poorly explained projects – after all, they’re in for profit, just like you! If you prepare your business pitch using the tips above, your experience with venture capitals is likely to be smooth.
- Angel investors. These are smaller investors who are mainly interested in so-called “private placement”. Angel investors are very often high-nеt-wоrth individuаlѕ who have extensive expertise in your business niche. This is very important, as if they like your idea, they will not only provide the capital, but also the advice, guidelines and helpful strategic recommendations. In a sense, angel investors are more like business partners, and less like “money machines”.
- Commercial lenders. While banks are not supposed to invest in businesses due to legal implications, no one can stop you from obtaining a bank loan to kickstart your business. So don’t discard this option, as every cent counts at the start!
- The small business administration (SBA) makes loans to small businesses, and if you’re lucky enough – to startups as well! As SBA often requires you to provide at least 30% of the required capital, this option only works if you have at least some starting funds. It’s also worth noting that SBA only works with banks that are “certified lenders”, so if your preferred bank isn’t one, it’s worth discussing other options with your banker.
These are some of the available sources of initial funds for your new business!
Hope you enjoyed our quick guide, and don’t hesitate to contact us if you have any questions.