Personal investments, Crowdfunding, Equity Crowdfunding, Series A, Angel Investing—when trying to get a new business up and running, there are many options for generating startup capital. With so many available, figuring out which one is right for your situation can be overwhelming. Let’s take a look at one of the major sources of startup capital available to aspiring entrepreneurs.
At the risk of telling on myself, when I hear the term “Angel Investor” I don’t think ‘mysterious force of venture capitalism here to breathe life into the dreams of young entrepreneurs and early-stage companies.’
No, no, I think ‘pragmatic individual who’s looking to make an (ideally) substantial profit off being the first one in the door on a new opportunity.’
What comes to mind for me is a scene from the 1994 Disney classic Angels in the Outfield, where a young Roger Bomman (played by then-child Joseph Gordon-Levitt) asks his motorcycle-riding, widower father (Dermott Mulroney) “Dad, when are we gonna be a family again?” To which his father replies, flicking his cigarette out into the street so the audience knows that he’s troubled by 1994 standards, “From where I’m sitting, probably when the Angels win the pennant.”
Bear in mind, these aren’t the Mike Trout, Shohei Ohtani, Noah Syndergaard Angels. These aren’t even the LA Angels. Heck, they’re not even the 2002 World Champion Anaheim Angels. This is a ball team that’s so bad they might as well be cursed. And it literally takes divine intervention in the form of Christopher Lloyd’s Al the Angel to get the team to a championship game.
Where am I going with this, you ask? Simple: much like Al and his ilk, angels walk among us, occasionally doling out their favor from on high. Not literal angels of course. Angel investors are individuals, specifically high-net-worth individuals, who invest money into early-stage companies in exchange for equity in that company.
Sound great? It is!
Angels can help shape the fortunes of early-stage companies immediately, not just because of the sudden infusion of startup capital, but also by attaching their name to the business—something that means a lot in the eyes of other potential investors. For early-stage companies, there’s a lot to gain by seeking out angels’ investment.
Here’s the thing about these angels, though: they’re not in this out of the good of their hearts. For them, this is an investment first and foremost, so if you’re going to try and attract an angel to invest in your offering, you’re gonna need more than a song in your heart of the innocence of a child.
- Have a plan in place – and, more importantly, show that you can execute it even without the angel’s help. Having smart goals and measurable KPIs can go a long way toward proving that you’re a business worth investing in.
- Build relationships early – cold-calling an angel investor is no different than cold-calling a hedge fund or other institutional body. Yes, they give out money, but not just because you asked nicely. However, they are people, and people can be good for advice or forming relationships. Both of which make them more likely to take your call when it’s time to seek investment.
- Take whatever you can get – don’t get greedy, because it’s not about the money. Does the money help, sure. But what’s much more valuable is the name that’s now attached to your company giving it credibility.
Want to know more about Angel Investors and Early-Stage Companies? read our source capital series.