Angel investors: Are they really the angels our world needs?
Not many of us can make it through the day without using www.google.com. But, did you know that this genius idea was initially funded by an angel investor? Uber and WhatsApp had the blessings (and funding) of angels, as well.
Who are angel investors?
Angel investors are usually high net worth individuals who invest in promising early stage startups. They accept the risk that these startups carry and invest in them nevertheless. You can expect anything between $150,000 and $2,000,000 from them. While some angels invest only once, others prefer being an integral part of the startup’s growth. They can provide fantastic support & advice that can help young startups tackle difficult stages.
In return for angel funding, the investors expect around 20%-30% equity. This may deter a few startups, but at the very early stages, VCs and other investors may not want to risk investing. Thus, angel investors are indeed angels who will support you and possibly even guide you through hard stages.
What do angel investors expect?
In order to win over angel investors, it is important to understand their expectations. While these may vary from one investor to the other, almost all of them care about the following:
- Passion and authenticity of the founders
- A clear business plan
- Large market potential
- Realistic terms and suitable valuation
- High chances of raising more funds once the startup gets rolling
Note: Investment is extremely personal for angel investors. Since there’s a certain amount of risk involved, they want to connect with startups and walk the initial journey with them. Authenticity, thus, matters a lot.
What are the requirements?
Before you approach an investor for angel financing, you must be sure to have the following:
- A very clear and concise elevator pitch along with a pitch deck. Keep an executive summary handy, as well.
- A working model of your product
- Early customers or users
There will be multiple meetings, negotiations, talks, due diligence, etc. before you get angel funding. Thus, it is important to be prepared for a long, tedious process full of various questions about finances (What are your financial projections for the next 2-3 years?), marketing (What is your social media strategy?), customer acquisition (what are the expected costs per acquisition?), and the management (What domain experience does your team have?) once you find the right angel investors.
Where do you find a good angel investor?
For many startups, 20% equity is quite hefty, and that is why they worry about angel investment. However, as aforementioned, it is hard to get VCs and banks interested in very early stage startups. The good news, though, is that there are powerful programmes such as Turbostart, which are outstanding alternatives to angel investment.
What does Turbostart offer?
Turbostart is a startup programme that aims at taking away the startup stress and enabling you to focus only on your business. You won’t have to worry about long meetings, tedious processes, etc. to get funded and mentored. With Turbostart, all you have to do is to apply to the programme. The top 10 startups will win INR 2 crore funding along with a plethora of useful services ranging from marketing to strategy, HR, legal, and more.
Applications close on 30 November 2019. Hurry up! Apply here or get in touch with us for clarifications.
Turbostart may actually be the angel you are looking for!