Whether it’s an initial investment to get the ball rolling, or financial support to keep your business running, at some point you might need money from an outside source. This is a common problem among small businesses, especially in the early months and years when they’re still finding their feet.
An angel investor is a great source of external funding, and this article will help you find your own angel investor. We’ll be covering a couple of different topics, including:
- The definition of an angel investor
- How to find angel investors
- How Countingup helps you manage your funding
Definition of an angel investor
Put simply, an angel investor is someone willing to invest money in someone else’s business idea. Angel investors tend to only give a single cash injection at the earliest stages of the company’s development, but some do provide more financial support if the business requires it later.
The key thing to remember with angel investors is that they will only invest in a business in return for equity. This essentially means that they will have a financial stake in your business, and will expect to have their investment returned when your company has enough money.
Please note that angel investors only invest in limited companies, because sole traders cannot offer equity to investors. This means that if you operate as a sole trader you will need to look for other forms of financial support.
How to find angel investors
There are many different places you can go to find angel investors, but not all of them will be right for you. Keep trying different strategies until you find the right investors for your business. Some angel investors might even approach you instead of you having to approach them.
Keep in mind that no matter where you find your investors, the process of earning their support is mostly the same: you’ll have to present your business plan and convince them that your business is heading for great success. As long as you have a clear idea of your company’s assets and unique selling point, you should be able to bring them around to your side.
Browse angel investor networks
Angel investor networks are websites full of people looking to invest in good business ideas. You can post your business idea to the network, and interested parties will contact you to ask for meetings.
These networks are helpful for two reasons: firstly, they allow you to display your business idea to a wide audience with very little work. Instead of having to approach investors individually, you can put your business plan on an investor network and it will be seen by a large number of people.
The other reason is helpful to investors as well as those looking for investment. The network website allows you to contact many different investors, but it also allows them to contact each other to share business ideas they’ve found. This gives investors the opportunity to pool their money together, which in turn allows groups of investors to invest a greater amount in your business than they would be able to individually.
There are many different angel investor networks. A few examples are Angel Investment Network UK, Envestors, and 24Haymarket, but they are by no means the only ones. Search online and apply to a few different networks, so that you can show your business idea to the widest possible audience.
Approach your existing network
It’s a good idea to make everyone you’re close to aware of your new business plan, as you might have a potential investor nearby and not even know it. Business contacts, old friends, and even family members are all potential investors.
Business contacts that you’re familiar with can be the best choice of investor, as you already know them well and they already have some business experience. In addition, even if they’re unable or unwilling to invest in your business idea, they might be able to give you advice on how to approach other potential investors.
You should also let your friends know about your new business, in case they’re interested in supporting your business financially. The same goes for any family member, but be careful when approaching family and friends for money. If your business does not do particularly well, and you’re unable to return their investment, it might put a strain on your relationship with them.
Have a look on Linkedin
Linkedin is an excellent tool for finding angel investors. This is because there’s a huge range of businesses and people on Linkedin, and the website’s search function allows you to find the right people quickly.
Good social media is important for any business, and you should take particular care to make sure you have a good Linkedin profile. This is because you should present your business in the most professional way possible if you’re going to use Linkedin to approach investors.
If you are looking to find angel investors on Linkedin, make sure that you don’t immediately approach them with an investment request. You should certainly introduce yourself and contact them as soon as possible, but make use of the website to build a relationship with the potential investor before presenting the investment opportunity.
Manage your funds with a simple app
Once you’ve succeeded in finding an appropriate investor, you’ll need to manage the money they’ve invested carefully. They’ll want to know how their money is being spent, and you’ll want to be able to track where your money is going. The best way to do this is with financial software like Countingup.
Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are.
You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward!
Find out more here.