In the earliest moment of a business, you will most likely find yourself a little light on capital. Without too much initial progress or traction, you'll probably find it quite hard to raise from Venture Capital firms. In the absence of VC dollars, you may be asking yourself "How do I find Angel Investors for my Startup?"
Credit to Elizabeth Yin of Hustle Fund for this slide from her Angel Investment presentation on Youtube. As you can see the Motivations, DD, Capital Sources and Amounts all vary a lot depending on who you are raising from. These are key to understand when looking at how timelines, processes and stakeholder interests function.
First and foremost, it will help to know what they 'look like'. Angel Investors are established, succesful and typically wealthy individuals who have succeeded in their respective fields and turned to investing their time, insights and capital into early-stage businesses. Some may be active globally, others will limit their remit to the UK or a sub-region of the UK.
Some very general characteristics to look out for:
But don't just approach people who appear to fit these criteria on the street, it probably won't be a resounding success...
First and foremost, through your network. Chances are you know other founders, investors or operators who understand your industry and are able to introduce you to some active investors in the space. If not a fit for your business directly, they should definitely be able to make introductions to others.
It is worth noting that many Angel Investors will purposefully remain anonymous, as much of the deal flow they see comes through their own private networks. Many are already inundated with opportunities and not open to being approached, but you will probably never find them or get an introduction - that may be by design.
If you have saturated your network, or it is not particularly strong at this stage, we have put together a list of 25 UK Angel Investors to know. If you still can't find any routes in, then it may be worth having a look at Angel Syndicates, which are more systematic and organised groups of Angels with formal application processes. Find out more about Angel Syndicates.
Aside from lists such as these, Crunchbase is a great resource for finding individual investors. Look up companies in the same or similar industries and find out who Invested in them early-on (Pre-seed, Angel, Seed or Series-A Round typically).
If you are still struggling, then it may be worth looking at exited entrepreneurs over the last 5 years or so in your industry. Chances are they will understand the challenge or problem set you are addressing better than most, and can definitely point you in the right direction.
Once you have identified some Angel Investors and achieved an introduction, you need to win them over with your pitch and vision. We put together a short guide on building a Pitch Deck here.
it is really important that the selection process is bidirectional. Your Cap Table is an extremely important asset, and you need to be selective over who you let invest in your company.
Having too many individual Angels early on may be a hassle (but this is definitely not always the case). Depending on how much you're raising and an Angel's individual ticket size, it may not be possible to keep the round small - but even so, the more Angels, the larger the network reach.
If you can raise £150k total from; one £100k cheque and two £25,000 cheques, that would be a round dynamic. If the larger cheque came from an industry expert or successful entrepreneur you could look to lean on them more than the others - but remember they ultimately will open doors for you, not help drive the company.
The other two smaller tickets may be active generalist angels and have great funding-specific network, invaluable when raising your next round. Ultimately make sure you understand what each investor brings to the table, and how they will contribute to your success.