What to look for in an investor — a startup founder’s perspective

When you’re an early-stage startup founder, you’re going to need to raise money. One of the best ways to do this is to approach angel investors. Angel investors are individuals who invest their own money in early-stage startups. They often have industry experience and connections that can be invaluable to young companies.

There are different kinds of angel investors, each with their own unique strengths and weaknesses. Here’s a look at some of the most common types of angel investors and how to identify them:

1. Solo angel investors

Solo angel investors are the most common type of angel investor. They are individuals who invest their own money in early-stage startups, typically on a case-by-case basis. Solo angel investors often have industry experience and connections that can be helpful to startups.

In 2010, solo angel investor Dave McClure invested $250,000 in Airbnb. That investment is now worth billions of dollars.

2. Angel investor syndicates

Angel investor syndicates are groups of angel investors who pool their money together to invest in startups. Syndicates can offer startups larger investment amounts than solo angel investors, and they can also provide access to a wider range of expertise and connections.

In 2012, angel investor syndicate AngelList invested $1.5 million in Stripe. Stripe is now one of the most valuable startups in the world.

3. Venture partners

Venture partners are individuals who work with venture capital firms to identify and invest in startups. They often have industry experience and connections, and they can provide startups with valuable guidance and support.

In 2013, venture partner Marissa Mayer invested in Pinterest. Pinterest is now one of the most popular social media platforms in the world.

4. Micro angel investors

Micro angel investors are individuals who invest small amounts of money in early-stage startups. They often invest through crowdfunding platforms like Kickstarter and Indiegogo. Micro angel investors can provide startups with early validation and support, but they may not be able to provide as much funding as other types of angel investors.

In 2012, micro angel investors on Kickstarter helped to raise $10 million for the Oculus Rift headset. The Oculus Rift is now one of the most popular VR headsets on the market.

5. Strategic angel investors

Strategic angel investors are individuals who invest in startups that are complementary to their existing businesses. They can provide startups with access to their customers, partners, and resources.

In 2014, strategic angel investor Jeff Bezos invested in Airbnb. Amazon and Airbnb now have a partnership that allows Airbnb guests to book Amazon experiences directly through the Airbnb platform.

How to identify angel investors

There are a number of ways to identify angel investors. Here are a few tips:

• Network with other entrepreneurs and startup founders. They may be able to introduce you to angel investors.
• Attend startup events and conferences. Angel investors often attend these events to meet new startups.
• Search online for angel investor directories. There are a number of websites that list angel investors and their investment criteria.

How to pitch to angel investors

Once you’ve identified some potential angel investors, you need to prepare a pitch. Your pitch should be clear, concise, and persuasive. It should explain your startup’s problem-solution, its target market, and its competitive advantage. You should also be prepared to answer questions about your startup’s financial projections and exit strategy.

Facts and figures

According to the Angel Capital Association, angel investors invested $25.2 billion in 12,720 startups in 2021. This was the highest level of angel investment activity on record.

The average angel investment in 2021 was $1.97 million. However, the range of investment amounts was wide, with some angel investors investing as little as $10,000 and others investing as much as $10 million.

Conclusion

Angel investors can be a valuable source of funding and support for early-stage startups. If you’re an early-stage founder, take the time to identify and pitch to angel investors. With the right approach, you could raise the money you need to grow your startup and achieve your goals.

IN MY NEXT ARTICLE I’LL POST MY EXPERIENCE DEALING WITH FRONTIER INVESTORS IN BANGLADESH AND HOW THEY DIFFER FROM ESTABLISHED ANGEL INVESTORS.

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