Getting funding for your startup can be one of the most difficult obstacles to overcome. There is a lot of information out there for budding entrepreneurs, but knowing which information applies to you and your startup is tricky at best. This guide will help you understand how angel investors can fund your startup and what angel investors look for in a good pitch.
Let’s face it, you’re reading this blog post because you’re probably an entrepreneur or you want to be one.You see the success of people all over the world who are living your dream lifestyle because they had the guts to take the risks. You’re probably sick and tired of being an employee with all the “joys” that comes with it including getting up for work, having to get days off authorized and having someone you probably don’t like telling you what to do. If that’s you, then you’re in the right place because we feel the same way, hence why we started Ürgos.
Before we get into Angel investors, it is important to understand what startup funding rounds are. The various funding rounds are as follows :
- Seed funding up to 500 000 £1 Million +
- Series A £ 2 – 10 Million approx
- Series B £ 7 – £15 Million approx
- Series C potentially hundreds of millions
Seed Funding Explained
This funding round is for the initial funding required in order to plant the “seed” for the business to be able to grow. Seed funding is typically for pre-revenue startups or those that have not yet launched their minimum viable product or service to market. Seed funding can be helpful for securing intellectual property like patents, trademarks, and registered designs, as well as funding the development of prototypes and day to day expenses like websites and digital marketing. Angel investors who typically invest in the Seed and Series A funding rounds are far less likely to invest in bigger funding rounds. Startups need to have a good idea of how much they need for the seed round. In order to avoid giving away to much equity at the early stages of the startup ecosystem.
Angel investors have become one of the most popular ways for startups to get funding. They tend to invest in early-stage startups who have a great idea, a great foundation team and a profitable market. This type of investor is much more likely to take a risk on a startup than the big venture capital firms. Angel Investors in the UK can only take up to a maximum of 30% equity per funding round and they are regulated to protect Startups.
Since the 2008 financial crash, banks have been far less likely to take risks by giving loans to startups. Some banks may sometimes match-fund but that requires startups already having capital, thus making bank funding inaccessible for the majority of startups. Angel investors have been filling this gap by funding start ups who do not fit bank lending criteria.
What do Angel Investors look for in a startup?
- One of the most important things that angel investors look at in a startup is the foundation team. Investors need to have confidence that your startup has the skills, expertise, experience, and knowledge needed to grow the startup which gives them a greater chance of getting a return on their investment.
- Your startup needs to have an innovative idea which offers a unique product or service which fills a gap in the market. This could be a new idea for improving an existing product like the Dyson vacuums or creating a totally new product. Your idea could be delivering an existing service in a new and innovative way like Uber taxis, just- eat or it could be a completely new service. Angel investors look for new ideas that have the potential to disrupt the marketplace.
- Knowledge of the market your trying to break into is of key importance for an angel investor. They need to know how big the market is, what the current trends in the market are and how much of the market share your business could potentially take. So..good market research and solid financial strategies are key elements that should be prepared.
- Proof of the progress that your startup has already made, with evidence of the key milestones your startup as reached, brand awareness and traction can be demonstrated by the number of followers on social media and traffic you get your website. So having and implementing a digital marketing strategy would be a good way to attract investors.
- Does your startup have any recognizable intellectual property(I.P.) like patents, registered designs, trademarks, and copyrights? Having I.P. can prove to an investor that your Startup has a tangible competitive advantage that could potentially disrupt that market.
- Investors usually ask for business plans and or a business model canvas to help them understand your business model as a whole. So taking the time to produce a good business plan or canvas is good practice when it comes to securing an investor.
How to get your Angel Investor
A good place to start would be finding the top Angel Investor websites online. Angel Investor websites act as a middleman between entrepreneurs and investors. They give both sides the relevant information they need about each other and can act as a means to start communication between entrepreneurs and investors.
We carried extensive research on various Angel Investor websites to save you time and hassle of having to look through them all yourself. We’ve found that the Angel Investor Network website is a great place for you to start your search for your ideal investor. The site has thousands of angel investors from all around the world ranging from industries and sectors all in one place. There are various membership options and the site offers a money back guarantee if you fail to get an investor after using one of their made packages. So if you’re a startup entrepreneur looking for an investor joining the Angel Investor Network website is a no-brainer. To get started on getting your investor CLICK HERE!