Watch the video for more details on how to raise with Angel Investors!
A startup’s financing/fundraising cycle starts from the Pre-Seed/Ideation stage and typically ends with a strategic exit such as M&A or IPO and the risk of failure typically lowers as the startup grows. Generally, angel investors would be investing in the early stage, specifically from the Pre-Seed round to Series A.
At the Seed and Series A round, startups typically approach VCs to lead and look for angel investors to fill up the remaining of the round. To understand the difference between an Angel Investor and an early-stage VC, read here. The style of angel investing may differ greatly based on each investor’s personal investment theory or style. A good Angel should have strong business experience and ideally good knowledge and network in the startup’s field. The Angel should also be rational with realistic expectations and a deep pocket to invest.
Angel Investors evaluate startups with 4 main criteria:
- Founding Team
- Business Opportunity
- Deal Terms
Startup founders should keep in mind that fundraising is a sales game. Therefore, founders should reach out to as many VCs as possible to understand the perspective and market valuation rate. It is important to follow similar stage startup valuations and be open to negotiations on valuations. Finally, as much as investors are doing due diligence on startups, startup founders should also do due diligence on investors and not be afraid to walk away!