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Angel investors: What are they and how do I find them

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Besides leveraging social media, actively engaging with fellow entrepreneurs and participating in industry events can connect you to angel investors that fuel startup growth

Angel investors: What are they and how do I find them

Every business requires funding. More so if you’re just starting out.

And if there’s anything once-startups like Airbnb or Uber has shown, it’s that angel investors can help firms raise funding with greater speed and flexibility than traditional venture capitalists (VCs) often can.

While some small businesses can start by bootstrapping, many soon find that they’ll require additional capital for expansion. With VC funding losing steam over the past few years amid rising interest rates and macroeconomic uncertainties, angel investors have become crucial sources of financing driving new business growth.

What is an angel investor?

An angel investor is an individual or group that provides funding to early-stage startups, typically in exchange for ownership or equity in the company. They believe in firms at their earliest stage when others have yet to take notice, which is why they’re called “angels”.

These investors play a crucial role in the startup ecosystem, bridging the gap between initial seed money and larger capital needs. They can also be a great source of financing for startups that may not qualify for huge bank loans or VC funding.

Unlike VCs who manage funds from institutional investors, angel investors tend to invest their personal funds and often take a more hands-on approach.

They actively engage with startups, leveraging their industry expertise to drive success. These investors are usually high-net-worth individuals with a keen interest in entrepreneurship and a desire to support innovative ideas.

Divya Khurana

Vice President at HSBC Innovation Banking

At HSBC Innovation Banking, we’ve seen the advantage angel investors provide to our clients. In a highly competitive landscape, angels bring valuable industry connections, mentorship, and hands-on experience

That said, angel investors tend to take minority equity stakes and expect a return on their investment through an eventual exit, which could include an acquisition or an initial public offering.

5 ways to find angel investors

For founders, securing the right investors at the right time is key for growth. So how do you find angel investors that fit your brand and culture?

  1. Leverage social media
    • Share your startup journey on social media platforms, and use strategic keywords, hashtags and search options to source for angel investors looking out for investment opportunities. Consistently engage with their content on LinkedIn or Twitter, and reach out with a compelling pitch when appropriate. In addition, utilise social media tools to keep updated with current market trends and increase your chances of securing the funding you need.
  2. Engage with fellow entrepreneurs
    • Fellow founders can be the key to raising capital from angel investors they already know, so don’t be afraid to ask for introductions and leverage these warm networks. Besides, building a community means you’ll have like-minded individuals who can offer support and relevant advice based on their personal experiences.
  3. Master the art of storytelling
    • With increased competition for funding these days, it is essential that your pitch be clear and concise, without technical jargon that may alienate potential investors. The more you talk to people, the better you’ll get. Welcome constructive feedback and hone your pitch. Among other things, you should be able to articulate the problem you’re solving, and share in an instant information about your team, your go-to-market plan, as well as your growth strategy.
  4. Join incubators and accelerators
    • Being a member of these programmes grants you access to a wealth of resources including experienced mentors, unique partnerships and investor connections that can catapult your business to success. When looking for investors, don’t just settle for the money - think about what value they can add to your business.
  5. Participate in startup events and pitch competitions
    • Industry conferences and competitions are a great way to gain exposure for your business. Even if you don’t end up winning, competitions provide opportunities to gain valuable insights and perfect your pitch deck. Events like these also offer the chance to network with angel investors. Remember, it’s often not just about what you know, but who you know.

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