Angel Investing: Is it OK for a Startup?

If you’re a budding entrepreneur with a great idea, you’re probably looking for ways to finance your startup. One of the rising trends in small business startup finance is the use of one or more investors. Unlike venture capitalists that invest in a company hoping to reap massive financial rewards, angel investors typically invest smaller amounts to help get a business up and running. It is always worth consulting with your Accountants Cheltenham way such as to esnure that this type of investment is best for your start up. Some of today’s hottest technology companies, including Facebook and Uber, got off the ground with the help of angel investors. How can angel investing help finance your startup?

Image Credit

Lay the Groundwork

Angel investor financing is an attractive option for entrepreneurs. Typically, angels give more favorable terms than traditional lenders and focus on the person or people behind the idea more than the business itself. That’s not to say, however that an angel investor will hand over money simply because of your sparkling personality. You need to lay the groundwork before approaching an angel investor for backing. Angel investing is risky and investors only take on the risk if they feel comfortable with you and your business model.

Businesses are only successful if they fill a need. Begin by writing a business plan that fully outlines your idea and includes information about marketing opportunities and strategies. If you have a few customers already, perfect. Proof of traction is one of the core conditions investors look for. Work out your financial requirements. Investors want details, including how much you plan to raise and what your projections are.

Come up with a brief elevator pitch for your business idea. Angels are more likely to help if you have a clear idea of what your business is and does. Product or service prototypes and models are also a plus.

Angel investors will want, of course, to know that you and your team are skilled enough to start a business and make it work. Enthusiasm, experience and, yes, your sparkling personality do come into play.

Where’s Your Angel?

Angel investors come from a variety of sources, including professionals in the same field, other entrepreneurs, venture capitalists, crowdfunding venues, including Indiegogo and Kickstarter, and family and friends.

Before agreeing to terms, make sure you and your angel investor are a good fit with personalities and goals that mesh. Ask if they’ve worked with other entrepreneurs and how they helped. Ask about how they plan to help you with your business.  Of course you may want to “go it alone” or decide after consultation that you were rather not pursue your initially intended idea you can always seek external advice from alternative places and your accountant can help you with new ideas as to where to look.

Angel Investor Trends in 2016

Angel investing is expected to continue its rapid growth and new trends are emerging. Some of the hottest investing industries include biotech, digital health and green technologies. Support for entrepreneurs is growing using connecting networks that promote success.

Angel investors as a group are expected to diversify, with more people in their 30s and 40s getting involved. The number of women angel investors is projected to grow at a significant rate. Increased investing globally is already a growing trend that is likely to continue as time goes on.