How To Find An Angel Investor For Your Start-Up?

Start-ups are born out of a vivid dream envisaged by an entrepreneur. They have their hopes, aspirations and life goals attached to it and put thei...

  • How To Find An Angel Investor For Your Start-Up?
    Lucas Nguyen Image Lucas Nguyen

    How To Find An Angel Investor For Your Start-Up?

    • Updated: Tuesday 22nd of December 2020
    • Strategy

    Start-ups are born out of a vivid dream envisaged by an entrepreneur. They have their hopes, aspirations and life goals attached to it and put their heart and soul into its growth. However, it is not easy for financial institutions or banks to offer them the funds they require by hearing the business idea alone. Also, after doing all the groundwork and beginning the operations, the organisation needs an impetus of capital to accomplish newer milestones. Thus, they need more funds in the initial few years to stay afloat, which requires the support of moneylenders.

    Angel investors can help in this regard as they have spare capital to be invested in promising ventures. They are high-net-worth individuals who offer financial backing to start-ups during the seed or the pre-seed phase to help them grow. Thus, if you are an aspiring entrepreneur who is planning to purchase a business for sale in Australia or launching his own venture, then you must know how to attract them. Many businesses in the growth stage and start-ups need their help to meet their goals but do not know how to get hold of them. It can be challenging if you are new in the industry and do not have many contacts. So here are a few tips on finding an angel investor.

    Recognising Angel Investors in The Crowd

    Angel investors are affluent individuals who are willing to offer financial support to start-ups in exchange for an equity share. Besides offering monetary support, they also help the company to move towards the path of success through advice and consultation. Thus, you must look for sophisticated investors in Australia.

    According to the Corporations Regulation 2001, sophisticated investors are individuals who have earned a gross annual income of $250,000 or above for each of the past two years or have net assets worth $2.5 million. They have several connections and are a part of a vast network of private investors. These investors can become interested in an idea if they are familiar with the industry or find the opportunity viable with significant returns. They may sometimes invest in businesses operated by family members and friends as a gesture of love and care.

    Sometimes, they fund organisations that are a part of their community to improve the economy of the region. It can be difficult to convince them to make an investment in a field which is not their specialisation.

    Finding the One That Matches Your Need

    You cannot ask any wealthy industry veteran to become your funding angel. It takes keen research to identify the one who meets your needs. Angels are seasoned people who have the knowledge of running a business and effectively offer the best guidance to naïve entrepreneurs. You should be aware of the qualities of the person so that you can leverage them to develop your own business.

    Thus, thorough research into the background of the person is highly recommended. He/she must understand your vision and be ready to steer the start-up in the right direction with his acumen. Some investors may ask for a more prominent role in the company or request for certain rights. You should be clear how much authority do you want to extend to them and find someone who is ready to follow your plan.

    Find Someone Within Your City

    Once you have researched about sophisticated investors in your industry, the next step is to shortlist the eligible people. However, you should not look for people who are living in other states or are too far away. It is necessary because angel investors are deeply involved with the business they choose for investment.

    Also, you will need their inputs on a regular basis, and one-to-one interaction makes sure that there is no miscommunication, and nothing is lost in the digital conversations. Various new businesses are emerging after COVID-19 and should look for investors close by. It will help you to have discussions and meetings without any hindrance of being separated by distance, and all the stakeholders can offer their opinions and views transparently. The angels generally want to have a closer association with the founders or the owner, and thus wish to be in the same region.

    Broaden Your Horizons

    You may be wishing that you will bump into an investor by co-incidence, but such things only take place in your imagination. To find an angel investor in real life, you need to understand that they are often found through referrals. So, you need to start networking as soon as you start sailing your entrepreneurial boat. Connecting with more people in your industry and related fields will help you to get referred to influential people. Many business associates, partners, colleagues, acquaintances in the field, and fellow entrepreneurs can help you to meet an angel investor.

    Thus, you must maintain good relations with local businesses in the community. Also, many experienced entrepreneurs with high-net-worth may be willing to become angel investors, so you must stay in touch with all these people. Another good way to improve your chances of meeting investors is to attend entrepreneur workshops, events, and seminars to find them.

    Look for Known People

    If you have an angel investor in the family or among your friends, then you must approach them with your pitch to get the funding. It is easier to persuade them as they are already acquainted with you and can place their trust in you. If you are closely related, then they may feel obligated to help you or may do it because of sheer affection for you. In any case, you must remember that the involvement of money can soon alter your relationship. You may feel that you are being emotionally coerced to offer a bigger share of profits than what was decided or find too much interference in how the capital is being utilised. However, it all depends on the founder of the business owner how he wants to maintain relationships with stakeholders.

    Go Online

    Besides looking for them in your social circle, you can take advantage of the digital platforms. You can join business groups on social media networks to know more about the participants and make new connections. Facebook, Twitter, and LinkedIn are the best networks to start your search. There are dedicated websites where you can find a list of all the angel investors across the country, such as Australia Angel Investors, Australian Investment Network, etc. These allow you to arrange meetings with the angels and present your product prototype or ask for seed money with ease.

    Conclusion

    Whether you have a start-up or have recently purchased a business for sale in Australia, it is apparent that you will need capital to thrust it into full motion. Thus, you must use the tips mentioned above to get in touch with an angel investor who can help with the financial part and help you to soar to new heights.

  • Author Info Lucas Nguyen

    Lucas Nguyen is an immigration expert with loads of experience of working in public sector and as an in-house lawyer. Lucas graduated with a Bachelor of Law and Master of Law in Global Business Law from La Trobe University. His sole aim is to provide best legal services, to his clients, on complex Australian Immigration Laws and commercial transactions. His association with Business2Sell is not new, and we welcome him as our guest author.