Every entrepreneur knows they need resources to make their world-changing ideas real. After investing their bootstrapped money into setting up the POC, raising funds is next in line. Many founders often struggle to raise funds for their startups, mainly because they don’t have enough expertise in networking with the right people in the industry. These people can help them connect with the right angel investors and mentor them in various parts of the business like business ideation, operational audit, networking, and revenue generation.
Angel investing is the most preferred and highly sought-after investment for early-age startups. But before you understand what angel financing is, let’s first understand angel investors meaning and how to find the best angel investors in India.
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Angel investor meaning
If you are a startup founder looking for capital for your startup, you should be aware of the various stakeholders involved in the industry. Therefore, you must know the angel investor meaning. Angel investors are High Networth Individuals (HNIs), and private investors specialize in investing in early-age startups in the exchange of equity. Business angels use their own net worth to invest in startups, unlike VC firms that use investment funds.
Unlike venture capital firms and investors, angel investors are more lenient regarding equity. They offer smaller dollar amounts for an extended period of time. It helps them reduce the investment risk as most early-age startups have yet to find a viable business model and effective revenue generation strategy. Apart from offering the funds, angel investors also provide valuable mentorship and guidance to founders to improve their operations and revenue model and navigate their venture toward profitability and success.
How to find angel investors for your early-age startup?
Various prominent angel investors in India actively invest in early startups and SMEs. If you are a founder looking to raise funds for your startup, here are some ways to know how to find angel investors for your startup.
1. Angel investor networks
Angel investor networks are the official investor groups investing in early startups and SMEs. The member investors collectively hear the founders’ pitches and assess the potential of the business based 0n different factors like business model, viability, market competition, and revenue model. Then they evaluate the business proposals and decide whether to invest in the startup.
Different members of the investor network bring different knowledge and expertise to the table, which collectively helps them to make an informed decision. They usually like to invest in their preferred industry in which they have more knowledge. But, at the same time, they are also open to investment in different industries out of their scope and better ROI potential.
Some of India’s major active angel investor networks are Let’s Venture, Mumbai Angels, Hyderabad Angels, Indian Angel Network, etc.
2. Startup and investor communities
Startup and investor groups and communities are great places to come across some angel investors who can invest in your startup. These communities consist of various entrepreneurs with successful exits, investors, startup experts, and mentors. The primary goal of these communities is to create a thriving ecosystem for budding entrepreneurs to raise capital and exhibit investment opportunities for the business angels.
These communities host various events, workshops, meetups, and seminars attended by entrepreneurs, founders, angel investors, consultants, advisors, angel financing experts, high-net-worth individuals, crowdfunding platforms, VC firms, and many other top stakeholders in India around the world.
As a founder, you will interact with individuals, pick their brains, discuss ideas, network, socialize and even pitch your startup for raising capital. So if you are looking to raise seed investors for your startup, be a part of these communities and groups.
Some popular startup communities are Headstart, eChai, Nordic Hub India, and TIE Global.
3. Social media platforms
Social media has changed the way people used to connect with investors. It has evolved from a mere way to connect with friends into an effective tool to communicate with people from the corporate and business world. That means you can use social media platforms to reach potential investors and fellow entrepreneurs.
LinkedIn, Meetup, Coffeemug, Facebook, and Twitter are some popular social media sites to connect with investors and people in the startup world. Many angel financing investors are active on LinkedIn and post their thoughts on the platform.
You can also join the live webinar they host on various topics related to raising funds. That way, you get to interact with them and pick their brains to improve your approach to fundraising. There are also various groups on Startup Network India and Angel Investor Group on Facebook and LinkedIn. You can join these groups to get the latest happenings in the industry and connect with potential investors.
Angel investing is undoubtedly a great way to finance your early-age startups. Now that you know various ways to find and connect with potential angel investors, it’s time to start working. Actively participate and contribute in these communities and interact with business angels and investors. Attend the events to meet people from the industry and pitch your startups. Raising funds for your business doesn’t have to be complicated. You need to be at the right place at the right time and keep your pitch ready. You can never know you might run into your desired investor in the elevator.
As angel investment and venture capital investments involve sharing company equity, many founders look for other types of investments, such as revenue-based financing. Investments like revenue-based funding reduce the investment risk for investors and allow the founders to retain their original equity. The founders need to pay the investor a certain percentage of the company’s current gross revenues for the exchange of investment they have made in the company. The percentage of the payment is mutually decided by the founders and the investors based on how good the company is doing financially.
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