New businesses looking to raise capital can benefit from angel investors. Angel investors specifically offer financial support to early-stage startups in exchange for a minority stake in the company.
But they bring a lot more to the table than money. Angel investors are an excellent source of professional and entrepreneurial guidance for new business owners who are yet to develop and bring their products or services to the market (think Dragon’s Den).
In this article, the UK’s top company formation agent, 1st Formations, advises 5 ways that new entrepreneurs can find angel investors. They also suggest some top tips for vetting potential investors and ensuring they are the right fit for your business.
On social media
A great place to look for angel investors is social media. Of course, in-person networking is still important (we’ll explore this in more detail later). However, for new, inexperienced founders, platforms like LinkedIn and Twitter can be incredibly helpful in starting those initial conversations and reaching a wider audience.
Before starting your search, you should ensure that your company website and personal and business profiles are up to date. Potential angel investors will want to access these to find out more about you, your background, and your entrepreneurial journey and aspirations to establish a personal connection.
Then, start with a simple search using relevant keywords. For example, if you own a tech company in London, you might search for ‘technology angel investor London’. Look for individuals, groups, or networking opportunities (including virtual) to connect with suitable angel investors.
Don’t forget to explore your existing social media connections and initiate conversations with possible angel investors that you or your friends might already know.
Social media is a great starting point when you’re looking for angel investors. It can instantly connect you with a wide pool of investors without leaving your home or office.
Through angel investment networks
Another valuable way to find angel investors is through investment networks. These platforms are dedicated to connecting new businesses with the best lead angels and syndicates.
For example, one of the most active and popular angel investment networks in the UK is the Angel Investment Network. Simply add and publish your pitch, connect with investors, and close the investment once your target funds have been reached. This platform also has messaging, calling, and meeting scheduling abilities.
Another well-known network is 24Haymarket. Here, members invest in early-stage, high-growth companies across a wide range of sectors including tech and media, financial, and food and beverage. Their entry criteria are stricter than other platforms and you have to apply before being invited to connect with an angel investor.
If these are unsuitable, there are some of the UK’s best angel investment networks:
- Angel CoFund Investors: Great for finding syndicate investors.
- Angel Academe: Targeted at female-founded tech startups.
- Angels Den Angel Network: Europe’s largest angel-led finance platform.
- Angels in MedCity: Find angel investors in the healthcare and life sciences industries.
- Ascension Syndicate Club: Early-stage angels who co-invest in S/EIS-eligible companies.
- Cambridge Angels: A popular angel investor network in the UK, but it focuses mainly on the Cambridge area.
- Cambridge Capital Group: Suitable for seed, startup, and early-growth companies in Oxford, Cambridge, and London.
- Connected: Raise capital whilst simplifying your business operations. This platform involves a membership fee, starting at £150 per year.
- FSE Angel Group: This platform focuses on investing in environmental, social, and governance (ESG) companies.
- Green Angel Syndicate: The UK’s leading climate change angel network.
These specific networks are an excellent gateway to finding suitable angel investors for your new business.
Through a venture capital scheme
The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are venture capital schemes run by the UK government. They are designed to help new and small businesses raise capital for growth by connecting them with suitable angel investors. In return, investors receive significant tax breaks.
Qualifying companies can use the SEIS to raise up to £250,000. Any capital raised through the scheme must be spent within 3 years on a qualifying trade, preparing to carry out a qualifying trade, or for the research and development that’s expected to lead to a qualifying trade.
If you want to raise more than £250,000, the EIS might be suitable. Qualifying companies can use this scheme to raise up to £5 million each year and up to a maximum of £12 million in its lifetime. Note that these limits apply to any other capital you might raise through alternative venture capital schemes.
Like the SEIS, the money raised must be used for a qualifying business activity. In addition, it must:
- Be spent within 2 years of the investment
- Not be used to buy all or part of another business
- Pose a risk of loss to capital for the investor
- Be used to grow or develop your business
Government-backed venture capital schemes are an excellent way to find angel investors for your small business. They offer an added tax incentive for angel investors to support the growth and development of new companies in the UK whilst giving entrepreneurs access to vital financial and professional guidance.
Use the advance assurance service on the gov.uk website to check if your company qualifies for the EIS or SEIS.
Through networking events
Networking events are a powerful way of making meaningful connections and meeting potential angel investors. As a new entrepreneur, you should attend as many industry events as possible and as regularly as you can.
Be proactive, start conversations, and have a business card ready to always go. Also, as your specific intention is to find angel investors, you should always be ready to make a pitch. Have a confident, concise, and engaging story about your business and why they should support you.
Remember, if you meet someone who isn’t an angel investor, they may be able to introduce you to one. So, you should always approach networking events with an open mind, optimism, and genuine interest.
Eventbrite is a great source for finding a wide range of networking events. You can look for relevant opportunities to your industry or geographical area or find specific angel investment shows near you.
Through friends and family
Consult your existing contacts to try and find angel investors. For example, if you know other entrepreneurs who are already established in their space, they are likely to have existing relationships and valuable insights to share with you. So, ask them for an introduction.
Not only is this a fast-track way to finding angel investors, but doing so through mutual contacts,
helps establish trust, an important factor in ensuring that you are both the right fit for one another.
Have the same conversations with any family members that you think may know suitable candidates. Alternatively, if you have a friend or relative who is an angel investor, that’s another conversation that could be worth starting.
Naturally, it may feel awkward to go into business with someone close to you, but there are some legal formalities (like a Shareholder’s Agreement) that can help separate your professional and personal relationships and protect your company and all those involved.
Top tips for finding a suitable angel investor
Once you’ve found potential angel investors, it’s essential to ensure that you make a good match. As tempting as it may be to secure vital funding for your business, don’t rush this process.
Remember that angel investors bring a lot more to the table; expertise and professional guidance to launch your business and make it a long-term success.
Therefore, you’ll need to have an excellent relationship with your angel investor. That involves trust, good communication, and effective collaboration. Here are some top tips for finding a suitable investor:
- Find references: If they’re an accredited investor, you should be able to get references from other entrepreneurs they have worked with. These will give you valuable insights into their previous successes and experience and instill you with the confidence you need to work with them.
- Access case studies: Experienced investors should be able to provide you with some case studies of previous businesses they have supported. This will help you understand how they work and how you might work together.
- Treat it like an interview: When speaking to potential angel investors, approach those conversations like an interview. Before a phone call or meeting, write down some key questions that you’d like to ask them and what makes a valuable answer.
Thanks for reading
So, there you have our top 5 days to find angel investors for your company and top tips for finding a good match. Remember that the process of looking for an angel investor goes both ways, and both parties must be happy with their partner.
Also, it’s often a slow process. Where possible, take the time to find an angel investor who aligns with your goals, values, business style, and vision for your company.
