5 Ways to Find the Right Angel Investor for Your Business
There is no dearth of business ideas in the market, but to turn a concept into reality usually requires capital. Unless you are one of the lucky ones who has enough funds to start your own venture, you would probably turn to an angel investor for your financing requirements.
While there is a growing number of investors looking to take a stake in many startups and businesses in Singapore, not every investor would be the right fit for you.
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Most importantly, every entrepreneur should share a certain bonding and chemistry with their investors.
This would allow you to discuss your business problems freely and receive inputs and advice on crucial issues pertaining to strategy, key hires and growth strategies.
Below are 5 ways for you to find the right investor for your business.
1. Does the angel investor have a successful track record and is it in your industry?
An angel who is familiar with the space you are targeting can be the best thing that happens to your business. The decision to invest in your venture will be a rational one based on the strength of your idea and your business plan.
If they have invested in businesses in your industry earlier and those companies have flourished, then this angel is probably the right one for you.
As they have domain knowledge about your industry, the very fact they have accepted that your proposal has merits should reassure you.
Now you only have to convince the angel investor that you and your team are the right people to run the business.
Example:
A company called Bite Tech Inc. developed a technology that reduces stress on the jaw, resulting in improving the strength and endurance of athletes competing in sports ranging from football to golf.
The angel investors for this “performance
These top-ranking athletes were quick to recognize the merits of the product as they realized the positive impact it could have for the performance of players in their respective sports.
Their investment in the company was also a validation of the startup’s product. This helped greatly in marketing efforts.
2. Is he capable of providing you
Angel investing should be more than just about money. The advice and guidance that an entrepreneur can receive can make the difference between great success and abject failure.
There are many issues that a businessperson cannot discuss with anyone in the company.
It is absolutely essential to have someone with the maturity and experience to guide you. If an angel investor can play this role, it is an ideal situation.
Example:
Jeffrey Paine’s Founder Institute in Singapore has graduated over 70 companies. He is currently an investor in and advisor to a number of startups including Tradegecko, Coda Payments, Ayannah, PopApp and
When he interacts with the companies that he has financed, he challenges the founders to think outside the box to establish leadership positions for their businesses.
3. Does he have connections that can help your business?
If the angel investor that you finally tie up with belongs to your industry you will have the advantage of using their links to help your business at every stage.
Personal contacts and a word put in at the correct place can do wonders for getting that crucial meeting with a key customer.
Sometimes knowing whom to approach within an organization to push your product or service is the most difficult part of the sale process. A key decision maker may not show up in the official company hierarchy.
At other times, your angel investor would be able to direct you to someone who would be in a position to give you crucial information that is not available in the public domain.
Example:
The advantage of having an angel investor with the right connections is very apparent in the case of Brian McCagg, an entrepreneur currently on his fourth startup.
His company, RecruitiFi, helps organizations seeking employees by directing them to executive recruiters who have expertise in people with the relevant knowledge and experience.
As an angel investor, Brian McCagg has a former executive of one of the big four recruiting firms. This person also advises RecruitiFi on the art of recruiting.
4. What did the angel investor do previously?
If you are able to identify someone who has a strong track record of investing in successful startups, it will help you generate interest from other investors. In fact, angels would compete to fund your venture.
Example:
Tigran Sloyan, co-founder and chief executive of CodeFights, wanted an investor who would give his venture credibility in addition to finance. He asked Adam D’Angelo
Adam D’Angelo had become an active angel investor after cashing out from Facebook.
He was impressed by CodeFights’ founders and saw great potential in the company as the startup’s products had already drawn many customers.
A month after
5. Is the angel investor asking for too many details before committing to your project?
The level of interest that an angel investor has in your project can be gauged from the number of questions that are put to you.
In fact, if your business plan is subjected to detailed scrutiny and queries by a qualified and experienced potential investor, it may even result in helping you fine-tune your plan.
But there is a limit to the extent of information that you should share with someone who has yet to commit to your project.
If an investor wants you to divulge the algorithms that drive your ground-breaking product, it is probably too early to share these details.
Remember, an angel investor will never sign an NDA. It is up to you to divulge only those details that are necessary to convince them that your business idea is a great one and that you have the capability to execute it.
It will take longer than you expect to find the right angel investor and after you have zeroed in on one that matches your requirements, it will take more time than you have estimated to get your funding in place.
While putting money into your business is a high-risk investment option for the angel, remember that the rule of thumb for returns is that the amount invested should increase by a factor of 10 in a period of five years. If that is what your angel is hoping to earn from your business, you are justified in taking your time and selecting the one who best meets your requirements.
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