All you need to know about Angel Investing

Ever wondered what it must be like to pull out a feather from your wings and attach it to someone else’s frame to help them fly? That’s exactly the kind of proud feeling you’d get when you are part of someone else’s success journey. In the Startup ecosystem, we call these individuals Angel Investors.

If you are just embarking on your entrepreneurial journey backed by a robust idea but are lacking funds, Angel investing can be a good bet for you!

The thrill that Angels get from backing strong ideas and turning them into wonders, can’t be beaten by the traditional stock market investments. Embracing ventures at the nascent stage and seeing them flourish is the true fruit for them.

Can I be an Angel Investor too?

If this is the question running in your mind, then the simple answer to it is “Yes”. As long as you are steady enough to take out a chunk from your capital and plough it into someone’s else business in return for equity, you are good to go.

How to approach an Angel Investor?

The Startup world attracts various individuals right from doctors, lawyers, business associates to seasoned entrepreneurs who have a keen eye on scaling new age ventures. And for Startups to find these Angels Investors, they can probably approach:

  1. Immediate network: Family and friends can sometimes prove to be the first and easiest source to finance your business. Trust and confidence in your plan along with the strings attached can do you good.
  2. Hidden caves: Finding Individual Angel Investors is not as easy as finding contacts on yellow pages. They are quite anonymous about their identity and one will need some ground-level research to be done, for you to make a list of potential investors.
  3. Syndicates: You can find individuals who are willing to park their funds in an Angel network where common interests thrive. These networks source best deals for the common benefit of those vested.
  4. Public platforms: Another interesting space to look at can be crowdfunding platforms, where one can flash their business proposal and request funding in the public domain. Though an exciting way to raise money, but not the most eventful.

Role of an Angel Investor

Now that you’ve learned where to look for Angel Investors, let’s look at how they wear multiple hats!

  • Mentor and friend – Angel Investors not just bring in the capital but often pool in a lot of time and expertise towards scaling the business. They can be the best guides and friends to Startup founders as they are much easy to approach.
  • Industry Connector – Startups can also benefit from the network brought in from their angel investors, as they are bound to be well connected and associated with similar industry experts.
  • Recruiter – While running towards scaling, Startups may need additional manpower. Investors can assist here by referring individuals who they have worked with in the past to speed up the recruitment process.
  • Market Outreach Facilitator – Early-stage Startups might not always find the limelight in their initial days, but Angel Investors can showcase the Startup using their social platforms to create noise and attract not just more investors but amplify and market it among future customers.
  • Board Member – As important as the founder, the investor can be a part of the board and assist in making critical decisions. For some founders, it can feel like they are giving up too much of their control, but there are huge chances that it might be for the better too.

Some key takeaways/Tips on Angel Investing

Investments are subject to market risks

Just like that famous disclaimer we hear at the end of mutual fund ads, Startup investing too can be a tricky play and yet heavily rewarding. Market research can take you a long way into making the right decisions. One also needs to learn the art to analyse and scatter the risk, as we all know – eggs in the same basket may not be the wisest move.

Safe haven

As the best first step approach to individuals new to investing, it is advisable that you look for opportunities where you can connect your industry experience and interest so that you are in a better position to make well-informed decisions. Investing is as much a learning process as a toddler learning to walk and you better get used to walking in Crocs before you attempt to run wearing Prada!

Join a Group

The best alternative to being masked is to be part of a group or network where you can review opportunities regularly. I’m sure you won’t be surprised by the 1:10 ratio, where you might end up evaluating nine deals and invest in the tenth. Also, if you are new to Angel Investing, due diligence work can be a challenge.

Joining a group will ensure that your deals are thoroughly evaluated and you have a healthy flow of pitch decks and indirectly a handsome wealth flow.

With MergerDomo, you can look at opportunities from the comfort of your homes, without paying a penny for finding the right matches. Express your interest in the deals and let it flow as smoothly as a virtual coffee meet!

So don’t hold back, register today and be part of tomorrow’s unicorns!

Authored by
Rosy Fernandes
(Relationship Manager, MergerDomo)

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