When do angels appear in your startup journey?
It takes several years of pious life and severance from worldly joy before angels appear to mortals, according to many religions. But you will be a bit relaxed to know that angel investors can appear somewhat early in your entrepreneurial journey and can save you from several possible miseries.
For many entrepreneurs, VCs and angels look the same. They can’t really find the difference between these two except for their entry points into a venture and the amount of money they invest. However, VCs and angel investors differ a lot. Let’s see how…
- While angel investors can take an equity share of your start-up in exchange for their investment, their funding can also be exchanged for convertible debt.
- It’s not uncommon for these investors to be entrepreneurs or former entrepreneurs themselves.
- Although money is their motivation, they are more likely to be genuinely interested in your business as well as the growth and development of particular industries.
- If you find the right angel investor, you may benefit from their expert advice and management skills.
- It’s more common for angel investors to supply funding to businesses when they are still in the early stages, whereas VCs typically look to get involved a little later.
- Unlike a VC firm that has a committee and advisors working together, an angel investor may make a decision on their own.
- They may simply like your plan, trust your goals, and believe that your business will be successful.
- That’s why it’s important for you to be able to articulate your business plan well.
- A short meeting over coffee or lunch with an angel investor might be all it takes to get them on board to fund your start-up.
Now you started seeing the typical angel investor,
- Someone with high education from an Ivy League college or similar
- Someone who had a few decades of successful career in top companies or someone who successfully exited a few businesses
- Gained immense managerial experience and is well-connected
- Amassed or inherited a lot of wealth, but don’t want to spend it on paintings or luxury cruises
- Someone whose success is often seen only in his association with companies or teams he worked with, but wants to make a name for himself as a thought leader or mentor or a managerial practitioner
- Most importantly, someone who is willing to put his own money at risk
So, angel investors want you to share your uncertain dream with them, to make up for a long and often boringly successful career he or she had. Your venture excites them as much it excites you. They need something to play around with and watch it grow. Obviously, it’s not the reward that entices them, it’s the challenge that they never had before. It’s something like a rich man trying to understand what hunger really is and trying to figure out how to earn his bread.
Angel investors like to operate mostly within their realm of expertise, but they want to solve problems arising out of various business scenarios. Entrepreneurs can greatly benefit from their experience and managerial skills.
In the next few articles, we will explore how to approach angel investors, and we will also discuss different types of angel investors, such as individuals, networks and super angels.