Struggling to find financing is one of the harshest realities of startup life — with several businesses essentially starting from scratch. According to a2019 study from SCORE, 42% of entrepreneurs are bootstrapping, starting with less than $5,000 in cash reserves.
When startup founders hit a certain point — often after dipping more into their savings than they'd like or exhausting what family and friends are willing to chip in — they start to explore other courses. One of the more attractive yet challenging options is landing an angel investment.
Here, we'll go over what an angel investor is, review the best angel investor networks, see the pros and cons of working with angel investors, and go over some tips to help you maximize your chances of receiving this kind of funding. Let's jump in.
What is an angel investor?
An angel investor is a typically wealthy individual who provides capital to startups in exchange for equity. These kinds of investors tend to support early-stage startups — ones that aren't in a place to appeal to a wider base of investors quite yet.
Angel investors generally look for promising startups in their seed or Series A rounds of financing and offer those businesses injections of much-needed capital to help get them off the ground.
Let's take a closer look at what they do.
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For most early-stage startups, angel investors represent the bridge between self-financing or sourcing funds from friends and family and receiving investments from established venture capital firms.
Angel investors typically have high net worths and extensive business experience that they can leverage to help the companies they fund. Once they've invested in a startup and received their appropriate公平, they usually assume an advisory role for that organization's leadership.
In most cases, they invest in industries they're familiar with — a trend that can make them excellent networking resources for startups. They're often well connected and can refer founders to other private investors as their businesses mature.
For a closer look at what angel investors do, check out this video fromInvestor Trading Academy