The term “Angel Investor”, originally Angel Investor or Business Angel, was coined in the United States, in the early 20th century, to designate investors who paid for the production costs of Broadway plays, taking risks and participating in their return. financial support, as well as supporting its implementation.
The concept evolved into the investment made by individuals, usually professionals or successful entrepreneurs, in startups, providing not only financial capital, but also intellectual capital, supporting the entrepreneur with his experience and knowledge. For this reason, it became known as Smart-Money.
The Investor-Angel receives, for its investment, a minority shareholding in the business, and does not assume an executive position in the company.
Instead, he acts as an advisor guiding entrepreneurs and participating in the company’s strategic decisions. It greatly increases your chances of success and accelerates your development.
The Angel Investor is usually a businessman, entrepreneur or executive who has already had a successful career, accumulating sufficient resources to allocate a part (generally between 5% to 10% of his assets) to invest in new companies.
Contrary to what many people imagine, the Angel Investor is not usually a holder of large fortunes.
One issue to be noted here is that the angel investor can only enter with financial resources, but it also happens, many times, that he adds to the business with his knowledge and expertise.
This is because, normally, we are talking about someone with a lot of experience in the market, with a successful career in the business world.
The angel investment in a company is usually made by a group of 5 to 30 investors, both for risk dilution and for sharing dedication.
In these groups, 1 or 2 are defined as leading investors for each business, to streamline the investment process. The total investment per company is on average between R $ 200 thousand to R $ 1 million, and can reach up to R $ 1.5 million.
In this modality, the investor will be present in the daily life of the company, not in operational matters, but as someone who can bring good insights, since he knows the market and other similar companies well.
What does the angel investor look for in a company?
Many entrepreneurs have ideas of success, but sometimes it is difficult to get off the ground for lack of capital and the conditions to make the business viable alone, especially when it comes to startups. One of the alternatives is to arouse the interest of an angel investor in the purpose of the business.
But what does an angel investor look for in a business? Below we list some items that stand out in the eyes of investors when it comes to being part of a new business.
– Present some kind of innovation
-Have a significant potential market
-Have good growth potential and high profitability
-Don’t be easily copyable, or have a “barrier to entry” for competitors
– Whose investment value does not exceed the limit of R $ 1 million;
-Need the investment exclusively for the company’s contribution
-The business plan is indispensable
But in addition to following these topics, you must keep in mind that you will hear many not, including from the angel investor. But that is no reason for you to give up, even more if you believe in your idea. Insist, improve and insist again. It proves that you will not leave the business due to any problems and that you are resilient to resist rejection and keep trying in different ways.
Before you arrive to talk to the investor and submit a proposal, make sure that you are prepared to answer questions about the market without hesitation. Show that you know your competitors, customers, the size of market demand, the regulatory environment, and so on. This is fundamental, it puts itself in the investor’s shoes. Would you invest in a new business, if the person responsible for the project does not give you confidence? It doesn’t roll, right!
In addition, be humble, recognize the things you don’t know and show energy to always learn.
How to find an angel investor?
Angel investors in addition to being entrepreneurs are people with an extensive network of relationships. Entrepreneurship events, courses, lectures are great places to meet angel investors.
If you are not lucky enough to find any of them this way, you can also opt for social media groups focused on angel investment, for example, Anjos do Brasil and Curitiba Angels. Angel investors also often hold many events to learn about new businesses.
If none of the alternatives have worked for you yet, you can try to contact directly with an investor. In this case, the task gets a little more complicated because they are usually very busy people. But you can try to approach it by email, but you have to be aware that your attention will be disputed with several other people who are in the queue.
The ideal is for someone to introduce you, look for someone who knows the person you want to ask for investment and try to arrange a meeting. Your chances of being heard will be much greater, as well as getting an angel investor.
Did you like the content and think that what is missing to leverage your business is the partnership of an angel investor? Also check out the text that explains why big companies should approach startups.
*Esse texto foi traduzido com a ajuda do Google Translator
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