Startup founders often have many questions about raising money from angel investors and angel syndicate platforms.
Here are some of the most common questions answered:
What exactly is an angel investor?
An angel investor is a wealthy individual who invests their own money in startups. Angels are often former entrepreneurs themselves. They invest in the early stages of a company in exchange for equity.
Why should I choose angel investors over venture capital?
Angel investors typically invest smaller amounts at earlier stages than VCs. They can also offer mentorship and advice to help guide your startup. Angels are often more flexible and patient than VCs.
How much control will I lose?
Angels invest for equity in your company, so they will own a portion of your business. However, most angels are minority owners and do not take an active role in day-to-day management. You maintain control of strategic decisions as CEO. The amount of equity exchanged depends on how much funding you raise and your company's valuation.
What's the process for raising money from angels?
The process typically involves creating a pitch deck to share your business plan, vision, and financial projections. You present to angels that focus on your industry and stage. If there is a mutual interest, you conduct due diligence and then negotiate terms. The entire process can take 3-6 months. Many startups raise money through angel syndicate platforms to access more investors at once.
How can my startup successfully get angel investors?
Build your network by attending industry events, reaching out to past mentors and colleagues, and leveraging business school and entrepreneurship program connections. Angel Syndicate platforms like A2D Ventures, Venture Catalysts, Elev8, AngelList, or Republic are ideal for scoring good deals and reaching successful fundraising. You can also search for individual angels focused on your location, industry sector, and company stage.
With some patience and persistence, startup founders can successfully raise funding from angel investors to get their venture off the ground. Answering these common questions upfront will help set proper expectations and prepare you for the process.
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*The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any subject matter.