Startup Opinions

Menu
  • Business
  • Startup Stories
    • Entrepreneur
  • Finance
    • Investment
  • Trending News
    • Infographics
    • Videos
  • Tech
    • Crypto & Trading

6 Important Things to Know About Tech Angels

shrayan lakhna February 2, 2016

Angels are private individuals who have access to enough wealth to put into startups and are willing to do so. Tech angels are a particularly rare breed. They may have sold a tech business or may simply be excited by the sector and willing to take a small gamble. However, there are a lot of myths about tech angels and it is important to understand the real situation, or it can be extremely hard to secure funding by this route.

They know what they like – Tech angels are usually bright people who have achieved a high degree of success in their lives. They understand business and often know what they want to invest in. More specifically they know what they don’t want to invest in. It cannot be assumed that they will invest in the sector in which they made their money. They often know it too well and would prefer to look at new sectors. Angel investors will tend to look at broad areas such as B2B, consumer or fashion. It’s important to listen to what interests them and not sell too hard.

They want to spread their risk – Angel investors are simply people with a lot of money to invest. However, it is important to understand that they will only invest a very small percentage of their wealth into tech startups. It is a risky investment for them and will normally only represent 10%-20% of their overall portfolio. They will spread this portion of their investments over as many as 20 startups over the period in which they invest. Do the sums and be realistic about how much to ask for from each angel.

They invest in packs – Although you may occasionally come across lone wolves, angels generally invest in packs. This is because they want to spread their risk as much as possible and investing in groups means they can make a lot more smaller investments. A startup may be looking for £200K. Given that the average investment may typically be approximately £25K, the total round would involve 8-10 angels working together. Don’t expect to find too many angels investing upwards of £100K on a single startup.

They respect each other’s opinions – Tech angels may want to take the lead or follow an angel that they respect. The lead angel will often be a ‘smart’ investor who either understands the sector or simply has a track record of investing in tech. This is a useful dynamic to understand. Find a respected lead angel and they will recommend your startup to their friends.

They are not just in it for the money – Tech investors are rarely investing just for a return on their investment. They get a buzz from keeping their hand in and helping the entrepreneur to make a success of the venture. They can bring a huge amount of experience and contacts. They are usually looking for founders who are open-minded to advice. They will only work with people that they can get on with. Listen to what your angel is saying and avoid being defensive at all times.

They are not easy to spot – People with money to invest, do not shout about it. On the other hand there are plenty of people with no money who find it useful to pretend to be investors. Real angels are spread over multiple networks or simply stay hidden.

In summary, it is important to understand that founders will not normally find individual angels to fund anything other than very early stage businesses. It’s a bit of a numbers game. You may have to find as many as 20 angels to invest in a single funding round. These angels may belong to several networks or may work alone. It is useful to get a commitment from one or two smart investors and get their help in both mentoring and introducing others. Be realistic about the individual investment size and build the total commitment in small chunks. If necessary, take part of the total round and continue fundraising until the total is reached.

Share
Tweet
Email
Prev Article
Next Article

Related Articles

Startups
Presented by BetterHelp. When you’re working to build up your …

How to Balance Optimism and Pessimism for A Realistic Startup View

startup need a Blog
Your startup is just getting off the ground. You have …

5 Reasons Your Startup Needs a Blog

About The Author

shrayan lakhna

Complete startup freak... Founder of Startup Opinions Expert in Google Analytics, ROI Tracking, SEO specialist, social marketing marketer.

Related Posts

  • How to Ensure Your Startup is Successful
  • How to Write a Startup Business Plan: …
  • What You Should Know When Getting Your …
  • Employee vs. Entrepreneur: Choosing Your Career Path
  • Born 2 is Teaching the Art of …




Startup Opinions

Startup stories and startup information

ABOUT US

Startupopinions is a leading blog platform profiling startups, reviewing new Internet products, and breaking tech news.

Contact us: [email protected]

USEFUL LINK

  • About Us
  • Contact us
  • Founder of Startup Opinions
  • Infographics Submission
  • Privacy Policy
  • Terms and Conditions
  • Write for Us

ALSO FROM THE TEAM STARTUPOPINIONS

  • Burptech
  • Skytechosting
  • Lets do startup
  • Free business ideas

DMCA.com Protection Status

Copyright © 2023 Startup Opinions