Over the next few weeks we will be giving you the lowdown on angel investors: how to find them, how best to pitch, and what they are looking for in your startup to help you determine if seeking angel investment for your startup is the best way to go.
We have already covered what a startup needs to do to find an angel investor, how to pitch to an angel investor and what an angel investor is looking for in a startup. This week we cover five ways you as a startup can make the most of having an angel investor’s presence in your business.
1. Financially investing in your startup
It kind of goes without saying that without angel investors, many startups wouldn’t receive early funding and be able to grow at their riskiest stage. The UK Business Angel Market Report 2020 estimated UK Angels invested around £2bn into UK startups each year so it’s clear that the first way you can make the most of angel investors is by having them invest in you and your business. Angels often invest at the early stage of your startup journey as financial incentives provided by the government to encourage this type of investment mean that a risky investment can be attractive with the potential of a high return.
2. Networking and professional introductions
Angel investors are successful business people in their own right and due to this likely have a wide network of contacts with varying skills and interests. If an angel chooses not to invest with your business, if they liked the idea but it wasn’t for them, they could introduce you to other angels who could be interested. Angel investors can also refer you to people to help you grow your business, or fill any gaps in your team make up who already have proven experience working in and developing startups. This could save your tonnes of time in recruitment or fill a quick gap in leadership while you recruit for a long term team member.
3. Professional Development
As many startups founders are learning everything as they go, angels can be an invaluable lifeline to advice and support to help you get through the early stage obstacles. Many angels are interested in not only investing their money in your business, but in developing you and your business. They often have a lot of experience building, growing, and selling scalable businesses and want the opportunity to utilise these skills to help others.
4. Strategy development and building the team
As mentioned above, many angel investors have been successful business owners themselves and can therefore help advise on your business strategy and assist you working through development options – their experience and knowledge can help speed growth and gives you confidence in your decisions.
Angels can also use their business and leadership experience to support you in building your team, helping you make the right recruitment decisions.
With many angels, there is a feeling of being in it together and so you can work collaboratively to achieve the best outcomes for your business.
5. Taking a risk
What makes angel investors so attractive to startups is that they are often more willing to take bigger risks in early stage startups than banks or VCs.
As a founder, angel investments don’t typically have to be paid back if the startup fails which is a big draw, though an angel may want to get more of a return to make the risk worthwhile. Though you still need to have a killer idea and an exceptional pitch to bag an investment!
Everything you always wanted an investor to tell you.
Watch the latest in our investor interview series where Decksender’s Mike talks to Matthew Cushen of worth capital.