Business Angels – Who Are They And What Is Their Role?

by Arun Bhatnagar

One of the most popular ways to invest is to invest money directly. This is the main activity of business angels and venture investors. The latter use the capital of other investors or their own company to invest, while business angels use their own funds. If you are interested in attracting angel investments or want to launch an angel investing platform, this article is for you.

Who Are Business Angels?

Business angels are individuals who invest their own funds in business areas that currently have high growth prospects. Often, business angels are already successful businessmen, investors, or popular people with large capital.

Today, dozens of companies are successfully operating around the world and have received funding from business angels at the initial stages of their work. These companies include Intel, Amazon, and Google. Such people have subordinates with whom trusting and friendly relationships must be built in order to work fruitfully.

The most attractive for business angels are grandiose and large-scale projects that in the future can have an impact on a specific industry and make it influential in the global market.

How To Attract a Business Angel To Your Project

It is quite difficult to earn the attention of one of the business angels on angel investing platforms. Every day, every investor receives a large number of offers, most of which are not attractive for investment. But by following a few simple rules, you can increase your chances of attracting investment.

Ways to attract a business angel to your project:

  1. It is recommended to conduct searches as close as possible to the place where the project will be implemented. In most cases, successful entrepreneurs pay attention to projects located in close proximity. This is due to the fact that during the work process there will be no problems with organizing meetings and maintaining communication with the startup’s managers.
  2. Idea. To gain the attention of a business angel, the idea must be as unique and “catchy” as possible. At the same time, it should be simple; it is not at all necessary to invent something beyond brilliant. If you take a fresh look at existing projects, you can develop your own idea that will stand out among others. At the same time, the creator of this idea must understand what profit his project can bring in the future. Also, do not forget that this information must be conveyed to a potential investor as briefly and clearly as possible. In the process of developing an idea, you should pay attention to market analysis in the chosen industry, this will help make communication with the investor as productive as possible.
  3. Business plan. One of the main advantages of the idea developer is the most understandable and clear business plan. With its help, you can significantly speed up the search for business angels. It must contain comprehensive information about the invented product. Particular attention should be paid to cost, differences from competitors, main advantages, and possible risks. If the inventor of the idea does not currently have experience in drawing up a business plan, it is better to use the services of competent organizations to draw it up.
  4. Determine the target audience. The investor must receive clear information about the category of people who will find the proposed product attractive. This target audience should be as wide as possible and combine other categories of users. This will directly affect the business angel’s interest in the project on a long-term basis.
  5. Communication with the investor. Almost all first meetings with business angels take place at presentations, where everyone can talk about their project. The inventor has on average 10-15 minutes to present his project. During this time, you need to do everything possible to arouse the interest of a business angel. Video demonstrations and handouts are recommended. The presentation should be bright, but not too bright, otherwise the business angel may think that they are trying to fool him by clouding his eyes with too bright and break-even prospects.
  6. Team selection. Business angels almost never invest in individual projects. This can only happen if the startup is extremely profitable and as unique as possible. Investors have much more confidence in a team of professionals who know how to take a project step by step to success. At the first stages, the creator of the idea must at least find a good manager who will be involved in the implementation and competent promotion of the startup.

Benefits Of Working With Business Angels

The founder of a startup always has the opportunity to attract a business angel even to the most risky, and at first glance, not promising project. But for this, it is necessary to find a business angel whose interests completely coincide with the interests of the project creator. This opportunity is very important for a young entrepreneur who does not have enough funds to implement his own idea.

As an example, we can recall such companies as Facebook or Apple; almost no one believed in their prospects.

Other benefits include:

  • Business angels receive income through the sale of their own share, and not directly from the project creator;
  • Often, business angels are competent in the areas they finance. Therefore, startup founders can count on practical assistance in implementing the project, as well as the application of the experience of a successful entrepreneur.

When compared with the activities of a classic investor, the work of a business angel has several differences. Firstly, it is worth paying attention to the fact that angels often pay attention to those projects that have not attracted interest from any credit institutions or venture funds. Often, a business angel not only finances a startup but also uses his own experience, wisdom, and knowledge to implement it.

Final Thoughts

Unlike some other sources of funding, business angels are usually easier and faster to negotiate a deal with. They can make decisions independently, without having to go through complex corporate approval processes. If you want to launch your own angel investing platform and are looking for a reliable company to implement this idea, we recommend contacting LenderKit. The company provides a white-label solution with which you can launch a customized, high-quality solution for raising funds for projects.

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