Seeking Angel Investors: What They Look For

Angel investors, wealthy individuals who provide early-stage capital for businesses, play a crucial role in the entrepreneurial world. In 2018, there were around 300,000 active angel investors in the U.S., investing a total of $23.1 billion in nearly 70,000 startups. These investors are looking for a solid return on their investment, typically aiming for a sevenfold return over a seven-year period.

There are three main types of angel investors: economic, hedonistic, and altruistic. They each have their own motivations for investing, whether seeking financial gain, excitement, or community impact. Regardless of their personal reasons, angel investors prioritize companies with strong leadership teams, comprehensive business plans, and structures that allow for equity investment.

For angels to consider investing, businesses must present detailed financial projections, marketing strategies, and a clear vision for growth. It's also important for owners to be open to giving up control in exchange for funding, as most angel investors seek minority equity ownership. Additionally, angels often expect to play an active role in the companies they invest in, offering guidance, serving on boards, or even taking on management responsibilities.

Before committing to any investment, angel investors require a viable exit strategy and thorough risk analysis. They want to know how they will recoup their investment, whether through a sale, merger, or other means. Ultimately, angel investors are looking for teams that are not only professional and prepared, but also deeply committed to their product and willing to work together to achieve success.