When you’re exploring new technology and innovation which often changes many of our daily lives, it’s nearly impossible to not also look at what makes the introduction of these technologies possible.
For many startups, that means funding from angel investors. Consider companies like Facebook and WhatsApp. Angel investors fueled these technology and social media innovations. Whether you have an idea for a new tech product, or you have a website or app you believe could become a phenomenon, you may try to secure angel investments.
An angel investor is someone who comes in during the early stages of a startup and offers funds in exchange for equity ownership interest. One way angel investors are typically unique is that they tend to make decisions on whether or not to invest much more quickly than a venture capitalist. Rather than combing through financials and other documents shared somewhere such as a Firmex virtual data room and then asking for a seat on the board as a condition of their funding, angel investors give businesses the opportunity to get faster funding while still maintaining more control over their business. This doesn’t mean they won’t conduct due diligence, but it’s not the only consideration for most angel investors.
If you’re interested in the technology industry or thinking of launching a startup, below are some additional things to know about angel investors.
Whereas a venture capitalist might be strictly looking at the numbers and conducting in-depth due diligence, an angel investor in the tech industry is likely to be much more interested in the people leading a company. You’re going to marketing yourself as much as your product because most of these investors want to see people leading a company who are honest, driven and passionate about what they’re doing. Research conducted by Propelx.com showed that 74.85% of angel investors said the management team was the most important factor in their decision-making.
Show What You Can Become
In the technology industry, it’s important you’re able to show a potential angel or a group of angel investors that your product or intellectual property has the potential to become something huge. The more you can give them a picture of the possibilities, the more likely you are to secure funding.
Create a Prototype
Even if you have an amazing idea, an angel investor is more than likely going to want to see a prototype. If your idea is to build a website no one’s ever seen or a new app, you should try to have a prototype ready for potential investors to see. The same research mentioned above from Propelx showed that second only to the importance of management was the ability to understand technologies when angel investors decide whether or not to put funding in a company.
Of course, every angel investor is unique, as is every group that comes together to invest in technology startups, but at the same time, many have similar approaches to how they decide whether or not a tech-related startup is worth their money.