Startups begin with an idea, but they won’t get much further than that without money. Funding needs to come from somewhere in order for that idea to grow and the business to flourish. You can invest your own money, you could ask your friends and family for help, you could get funding from an angel investor, or you could receive funding from venture capitalists.
Most likely you are putting some of your own savings into the business and perhaps your friends and family are too. Or, maybe you don’t want to ask family or friends for money because sometimes that can get sticky. If between your own savings and offerings from family you have plenty of funding—great!
However, for most startups that’s not the case. They need to find investors. Unlike venture capitalists , which are looking to invest other people’s money or money from funds and endowments, angel investors are individuals or groups of individuals looking to invest their own money in return for equity in the company.
Angel investors can offer more than just financial help. They also offer financial advice and business mentoring. Often angel investors choose to invest in startups that they find to be personally intriguing. These individuals can help get your startup off the ground, as venture capitalists tend to wait until the business is more firmly established.
How does one go about finding a wealthy individual willing to invest money in your idea? Angels are not as elusive as they may seem. In fact, in this digital age, relationships with angels can even be forged online. Here are 4 online platforms that can help you find your business’s angel.
The Angel Capital Association, as its name suggest, is an organization of both individual and group investors. Their website offers resources for investors including webinars, articles, and video podcasts on topics that range from learning about due diligence and valuing startups to information about term sheets. Though this information is meant for investors, it doesn’t hurt entrepreneurs to be aware of this information and know what sorts of things are important to investors when looking at startups to invest in.
What’s most helpful for startup founders, however, is the directory of angel investors. They are organized by region. For privacy purposes, individual names aren’t listed, but organizations of angels are.
“Although ACA is not a source of capital itself, it is the source for critical information and data that aligns the needs of angels, entrepreneurs, and the startup support community.” (About ACA)
Funding Post is a website used to connect entrepreneurs with investors—angel investors and venture capitalists. Entrepreneurs create a profile that investors can look at. There is an initial start up fee for the first three months, and then a monthly fee for the profile to remain active. However, at no charge, you can make a profile and Funding Post will let you know how many potential investors could be interested. Since angel investors tend to vary greatly in regard to how much they are willing to invest and where their interests lay, this is a helpful feature of Funding Post. You want to make sure you are barking up the right tree and that there are potential investors available before spending money to post a profile.
Gust is a web platform that was founded by David S. Rose, a man known for being a serial entrepreneur and big time angel investor. Like Funding Post, a main component of Gust is connecting startup founders with investors. Unlike similar platforms, Eilene Zimmerman writes for The New York Times, “Gust doesn’t curate the deals presented to investors by reviewing applications and then picking which companies investors should see.”
In addition to investors, Gust also helps startups connect with business accelerators. There is no fee for startups.
Gust also now includes Gust Launch, which helps start ups with many of the logistics and legalities or starting a business for a monthly a fee. As well as, Gust Equity Management, which helps to organize your cap table.
AngelList was created by Babak Nivi and Naval Ravikant in 2010. Using AngelList, startups can connect with possible investors and also find employees. Similar to Funding Post and Gust, start up founders can create profiles for their companies that are visible to investors. Not every investor sees every new start up profile in their feed. AngelList admins sift through and try to make connections that are worthwhile for an angel investor. However, as a start up you can be proactive. The AngelList help page suggests, “Use AngelList like a social network; follow people and companies, comment on posts and like others’ updates.”
Similar to other social media platforms, AngelList can be a great way to connect with others. Except with AngelList the connections made are all with investors, fellow entrepreneurs, and potential employees. In an article for Forbes, Women 2.0 offers the following insight regarding Angel List, “Like any new social network, AngelList has a learning curve and requires a commitment to building a profile, researching people and companies, and studying how they’re connected.”
Procuring funding for your company is an important step, but you want to make sure that you continue to make sound financial decisions in order to grow and generate revenue. Connecting with a solid accountant, especially one with experience in this field, can help. For more information, contact Lucid Advisory and Finance.