How do I find angel investors

Find a business angel: finance startups in a smart way

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When angel-like cornucopia pours over founders, there is usually a so-called one Business angel behind. Business angel - in short, too BA or Corporate angel called - are private individuals who participate financially (with an average of 100,000 euros) in a startup or company at a very early stage and at the same time support the start-ups with know-how and contacts. But until startups have found such a private investor who can provide them with basic financial resources and nurture the company baby, a lot of sweat will run down their foreheads. We'll show you where you are Find a business angel - and how to choose them correctly ...

➠ Content: This is what awaits you

➠ Content: This is what awaits you

Business Angel: From heaven

In contrast to Venture capital companiesBusiness angels who tend to focus more on growth financing invest in startups at an early stage - so-called Early stage or Seed Investments. Typical for such a BA participation are not only the low capital sums with which the business angels enter (often only up to 100,000 euros, rather less), but above all the know-how that the angels bring with them.

In technical jargon one speaks therefore of Smart capital.

Most business angels not only act as donors, but also as consultants, Founder coaches and door openerswho, with their network, are launching the first important business alliances.

That was extrapolated Volume of holdings the business angel in Germany alone in 2007 was around 400 million euros - tendency constant. A small field. In the US, it's $ 25 billion to $ 50 billion a year. But there are also around three million business angels there.

In addition, the Angels are definitely picky. With a good one Business idea their money box is far from opening on their own. Founders also have to convince ...

  • with your Management team.
  • a clear one vision.
  • a recognizable Monetization Strategy.
  • traction of the product or service.
  • a lucrative one market.
  • and by your own financial commitment.

If you only hope that others or the business angel will shoulder the financial risk alone, you usually get nothing.

If all of these points are correct, however, the following questions arise from the founder's point of view:

  • How do I get hold of such a business angel?
  • Where can I find my personal business angel?

We have put together the most important tips and networks for you ...

Where can I find business angels?

  1. Networks

    The Business Angels Network Germany (BAND), a registered association and occurs in this country as Umbrella organization the heavenly financiers. Startups have the opportunity to submit an executive summary of their business plan. The association then forwards them to potential investors. He also organizes various networking events and awards the title of “Business Angel of the Year” every year. Besides that, there are also regional associations such as the Business Angels Frankfurt or the Thuringian Business Angels Network. All of them are good starting points for networking for founders.

  2. Founder Platforms

    This includes portals such as Crunchbase.com, where founders can present themselves and present their ideas. Crunchbase could be described as an international startup database that is continuously edited. A good tool to put yourself in the limelight and thus lure the media and investors - business angels, for example - onto your own trail. The AngelList belongs in the same category, is a mixture of Wikipedia and social network: create a profile, network, research and search for investors - startups can do fundraising here and woo potential donors directly. But: It won't work on its own. Without regular updates and research, the search will come to nothing.

  3. Events

    The umbrella organization BAND, in turn, regularly organizes the Business Angel Community Summit and the German Business Angel Day - alternating every two years. The Hannover Messe also has a startup pitch in its program. In Austria there is the Austrian Business Angel Day. And don't forget: now even the TV evening program has become an arena for founders: "The Lions' Den" A number of young entrepreneurs have already stepped onto VOX to advertise the business idea - one or the other business angel will certainly also be in front of the screen. There are also so-called accelerators and startup funding programs.

How do business angels invest?

You can address business angels at an early stage of the company. You carry a high risk, but you also participate in the big one Growth dynamics and the Increases in value at the beginning.

Some angels invest in startups alone, others join in Mini networks together to efficiently bundle your networks, strengths and capital.

The average is Investment amount of a single angel seldom more than 50,000 to 100,000 euros. Larger sums of up to a million euros are rare and are more likely to be shouldered by several Angels in a group - not least to spread the risk. Depending on the calculated company value, the company holdings are then between 20 and 49 percent. Founders shouldn't accept more in this phase.

However, business angels do not want to purchase a season ticket with it. Your interest and the Investment duration are limited. Typically, angels look for it four to seven years after a so-called exit, in which you sell your shares - at a profit, of course - to another investor (or on the stock exchange). In order to make your startup more attractive to private investors, you should therefore also find out about possible Exit strategies think for the fishing rod. This is usually achieved by planning further financing rounds in the business plan.

How do I choose a business angel?

  1. preparation

    At the beginning there is a focus on your own product. A brilliant idea, a solid business plan, a good presentation - these are the basic requirements for being able to win a business angel over at all. You should definitely prepare a so-called one-pager (executive summary on one page) or a so-called pitch deck (maximum 15 pages) in which you outline the most important key data of the company. Anyone who shows up at investors without homework looks unprofessional right from the start.

  2. credentials

    Which startups has the Business Angel supported so far? How many? How long has he been doing this? What else is he doing? When did he get in and out again? In short: what is his track record like? Obtaining information, checking references, squeezing other people about him - you should take your time, because there are also some vultures and rip-offs in the angel industry. By the way, they are called within the industry Business devils. Be wary of those. Tip: Never shoot up money to supposedly get some afterwards.

  3. chemistry

    The chemistry must be right. A sentence made for the phrase pig, but no less true: Founders and angels spend a lot of time together, talking, advising, brainstorming, conferring - over the Internet or face to face. If you do this with someone you can't stand, sooner or later you will lose interest. The private harmony has to be right - you hear that again and again in the industry.

  4. Location

    The world is connected like never before. However, physical closeness still remains an advantage: a joint exchange between the founder and Engel can resolve grievances faster than a round of Skype. Visiting a trade fair together, cleaning doorknobs, discussing things, drinking coffee and and and ... If the fishing rod is ten hours away by plane, all of this is more difficult.

  5. capital

    The angel with the thickest checkbook is not always the best candidate. Often more important is the question: How many shares and freedom of choice do I have to give up? Here it is important to carefully weigh up - between financing requirements and creative leeway. A business angel who supports you in the operative business and actively helps to build a functioning company is possibly the better choice.

  6. network

    Your business angel is ideally networked with other investors, lawyers, recruiters and marketing people. Advantage: He will keep your back free and bring you together with external experts so that you can concentrate fully on your core business. As founders, you don't just want to benefit from your angel’s mammon, but also from his contacts - from someone who will advance your startup and make it better known. Can your business angel do this? But also important: if a business angel has too many investments, he may not have enough time for you. Industry expertise and references in abundance do not always have to be an advantage.

  7. Branch

    On the one hand, it makes sense to focus on people who have a wealth of experience in the respective industry. Example: Angels who have already invested in other fintechs and are familiar with the pitfalls of the industry are ideal for a fintech startup. On the other hand, it can also make sense to take off your blinkers and address business angels who have no industry experience. Private investors are curious and enthusiastic - and thirst for fresh ideas. Fears of contact with non-industry business angels are therefore a bad advisor.

  8. Investor search

    A tip for advanced users: if you already have a business angel at hand, you should involve him as much as possible. Specifically: He should go looking for investors with him. A well-known name creates trust and credibility - and increases the chance for future financing rounds.

Young founders: this is how you are taken seriously

Work experience is certainly a helpful factor in starting your own business and finding investors. Nevertheless, more and more dare young founders the step into self-employment, not least because there are now much lower market entry barriers, both technically and via the Internet. But young founders in particular have to prove themselves even more strongly in order to to be taken seriously.

The following tips will show you how to do this:

  1. Don't let that get you down

    Every founder must expect to face headwinds at the beginning. In the case of young founders, this can blow even more violently. Investors will advise you against your plan, tell you that you will not make it, or even outright declare your idea absurd and bad. If you want to be taken seriously, you mustn't let it get you down. Demonstrate that you firmly believe in your idea and have strong and resilient arguments for it - numbers are best. If there are even initial results, initial customers and market interest, the ice is broken and investors will pay less attention to your age.

  2. Be professional

    An appropriate business outfit, the right body language and a professional lecture, for example when you present your business plan - all of these things have an enormous influence on the first impression you make. Here you can already set the course, whether you are perceived as a serious founder with solid planning or as a young student with a dream. Of course, you shouldn't pretend, otherwise you will lose the authenticity.

  3. Make the right contacts

    Do you still lack the experience? Then find a mentor or two before reaching out to investors. Benefit from the experiences that older founders have already made and use their findings for your own company and your personal career. Not only can you learn a lot, but you will also be taken more seriously when you surround yourself with successful and experienced entrepreneurs.

  4. Use your age as a strength

    Even if age is often interpreted as a weak point, it can be the greatest strength: Perhaps you understand your (young) target group much better and can use this knowledge to set yourself apart from the competition. Or you can take a critical look at the old structures and recognize which errors exist and how these can be avoided today. Make it clear that you are bringing a breath of fresh air.

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20th October 2020Author: Jochen Mai

Jochen Mai is the founder and editor-in-chief of the career bible. The author of several books lectures at the TH Köln and is a sought-after keynote speaker, coach and consultant.

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