The legal definition of a qualified angel investor is someone that either earns over $250K each year or has a net worth of over one million dollars. While this may be more money than the average person brings in, for the investment landscape, it’s actually rather small. For example, venture capital funds are generally made when several multi-millionaires or billionaires come together to create an investment fund. By comparison, a successful medical professional or real estate agent could become an angel investor if they so wished.
In 2015, angel investors put a grand total of $24.1 billion into various ventures. In addition, compared to venture capitalists, you may stand a better chance of getting an angel investor to get interested at the seed stage. Here are some of the key things you need to keep in mind when appealing to angel investors.
Understand That Not All Angels Are Alike
If you were to go online and take a look at venture capitalist firms, you are likely going to see that a lot of them have a specific area of expertise. The same applies to angel investors. An individual investor may not formally explain what type of investments they prefer, but chances are, if you take a look at their past investments, you are going to see some key trends. This means different sectors and business models are going to be a better match for different investors.
In order to compile this necessary information, on top of research, you may need to do some networking in order to get yourself in front of angel investors. There are a few ways to do this. Some of the most successful options are using online platforms specifically designed to connect angel investors to opportunities, as well as industry events that serve the same purpose. Another, more accessible option for some is using angel investment networks. The only caveat with these is that there is a lot of activity on these platforms. If you don’t have established connections already, it’s easy to be passed over.
Combine Storytelling And Details
For venture capitalists, data is king in order to choose opportunities. By comparison, an individual angel investor is often taking a more hands-on approach to the investment process. As a result, while you do need to bring concrete data to the surface, the investors are also looking to buy into an idea and the person behind it. So, when the time comes for your pitch, you want to make sure that you are doing more than just repeating your business plan.
A good way to start with this is making sure that you add some type of narrative and storytelling to your pitch. You don’t need to go overboard, just enough to explain how your product or service will serve your customer base, and what drove you to create this idea and bring it into business. Equally important at this point is making sure that you talk about your team. All investors, angel and venture capitalists alike, want to see a team of dedicated and skilled individuals behind an idea.
Angel investors are an important part of the investment ecosystem, but ultimately, they are just that—one part. You want to have access to other methods of funding for your business if you need more than what an angel investor can provide. This is where companies like PrimaryMarkets come in, serving as a global independent marketplace that lets wholesale sophisticated investors take part in secondary trading of securities and investments. In addition, we also help unlisted companies and trusts to raise new capital.