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How to Find Angel Investors [Especially the Ones No One Knows About]

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How to Find Angel Investors_HeaderFinding angel investors is a common need for entrepreneurs. With an angel investor, your company can be poised for great growth.

Without one, unfortunately, your great idea might remain in your head, for it doesn’t have the funding to flourish.

 

The 2 Types of Angel Investors

In discussing how to find angel investors, we need to start by identifying the two types of angel investors.

One type of angel investor I call public angel investors. The second is what I refer to as private angel investors.  Each has their advantages and disadvantages, as you’ll learn below.

How to Find Angel Investors_Public-AngelesPublic Angel Investors

Public angel investors are angel investment groups or individual angel investors that you can find online and/or specify themselves as angel investors.  For instance, you can do an online search on angel investor groups in your area and will most likely find local angel groups.  Such groups work together on finding companies to fund and vetting them. They also pool their money together to enable them to invest in multiple businesses in order to have a portfolio of angel investments, which is generally the best investment strategy. Because you can find these angel groups online, I refer to them “public” angels.

The second type of “public” angel is someone who publicly identifies himself or herself as an angel investor. By going to a site like LinkedIn and searching the keyword “angel investor,” you will find such individuals and then contact them.

The advantage of “public” angel investors is that they are easy to find. The disadvantage is that because they are easy to find, everyone finds them. That is, they are constantly being approached with investment opportunities and can only fund a tiny portion of those that they see.

How to Find Angel Investors_Private-AngelsPrivate Angel Investors

Understanding “private” angel investors is really exciting because there are many, many more private angels than public ones. Private angel investors are people who have either made just one or a small amount of angel investments or who have the financial ability to make an angel investment but have not.

Most “private” angel investors are what I call “latent” angel investors. They are  “latent” because they have the means and interest in making an angel investment but they just don’t have any angel investments that they know about.  They’re just not getting approached with businesses to fund.

These angels are my favorite because they are not receiving tons of business plans.  Conversely, a public angel or a venture capital receives tons of investment opportunities, and as a result, they must be much more stringent in their funding criteria. And ultimately, the chance of them funding your business is much less because they have so much else to choose from. But with “private” angels, who have much less to choose from, there is a high likelihood that they’re going to choose you.

How to Find Angel Investors_Finding_Latent_InvestorsFinding Private or “Latent” Angel Investors

So how do you find these private or latent angel investors?

The way to do so is via networking.  You network by asking who do you know and who do others know.

Ask your lawyer, “Who do you know that might be interested in funding my business?”  Ask your uncle. Ask your accountant. Ask your current friends. Ask your friends from high school or college. Ask other members of your religious congregation. Ask everyone, “Who do you know that could fund this business?”

And importantly, ask other business owners. We all go into retail establishments often and many times you’re speaking with the owner of the business.  Ask the owner, “Hey, is this something that you’d fund?” Or ask, “which other business owners do you know that you can introduce me to?”  Most business owners know other business owners since often their members of local Chambers of Commerce together.

The name of the game here is networking.  Networking allows you to find other business owners, executives and/or other people with money.

How to Get Started

The easiest way to get started with raising funding from angel investors is to target “public” angels. As discussed above, you can go on any search engine or LinkedIn to quickly and easily find these investors.

Reach out to them via emails and try to attain a meeting. Remember that the odds of any of these investors funding you are low since they review so many other investment opportunities. But, if you speak with enough, one may fund you. And many may refer you to others and/or provide valuable feedback.

While you’re reaching out to the “public” angels, start your networking process to find “private” angels. While these angels are much harder to find, remember that when you do find them, they have a much higher likelihood of funding you.

How to Find Angel Investors Infographic

Below is an infographic of this article for quick reference.

How-to-Find-Angel-Investors-Infographic

Recommended Slideshare

To further help you learn about and find angel investors, we put together the slide presentation below to show you the key differences between angel investors and venture capitalists.