Angel Funding is an important aspect of business and please be sure that you have some revenue or proto type is ready before you start fund raising process. In this article, we will discuss the process, a mindset of angel investment in a startup.
How can you raise Angel Funding for Startup?
Angel funding is done by angel investors, who are high net-worth individuals. They invest in startup for a minority share in the business. It can be done by themselves or in a group of individuals who pool in funds to invest. Delhi NCR Ranked as No. 1 Funding destination in India.
They invest in a particular company based on various factors and they can be partners or entrepreneurs themselves. The general perception about them is that they are loaded with money. However, there are lots of investors present in the market today but it is difficult to get investors for your company especially for start-ups.
Fund raising is very important in case you have no capital for your business. This type of funding is accounted as legally nowadays.
Usually, angel investors come into the picture when the business idea is just a concept and entire funding is done based on your Business plan. As startups are risky propositions, angel investors don’t put huge sum.
How to Raise Angel Funding for Startups?
If you are idea stage than 1st process should be Company registration and also need to obtain GST registration i.e. licensing and registration should be completed before your approach the Angel investor. Angel funding sees to be difficult but it depends on the investor for startups. In the case of angel investors, once they are convinced with your business model and surely they will review your business plan. After a review and analysis, they invest without any security in terms of assets but they want security in terms of profits & good strategies.
Business angles vary from silent investors to those investors who get involves in operations of the company. Silent investors are those who sit back & wait for the results whereas other investors who get involved in operations of the company as a part time consultant or full-time partner.
Following are the categories under which business angles are classified:
- Entrepreneurial Angles
They are those who are carrying their own business but also looking for investing in other firms. They are considered as more experience and they have a fair idea about how the market works.
- Corporate Angels
They are the one who is linked to the corporate world as they have established themselves in multinational companies and looking for investments.
- Professional Angles
They are the silent investors generally who invest their savings. They are the one with professional jobs such as doctor or lawyer or Actor or CA.
- Enthusiast Angles
They invest in startups as a hobby. Generally, they are the retired entrepreneurs.
They are the one who has already established their companies and looking for startups which they can run. They are considered active and even sometimes present as board members.
Generally, investors invest in exchange for equity ownership interests. They particularly deal on the basis of attitude, quality, commitment, and passion of entrepreneurs. They are concerned with the potential of a startup in the market and business plan and interest of the customers. On the name of humanity, they also invest on the beliefs of a particular startup.
Angle Investors Expectations
Investors expect particular things from start-up. Initially, investors keep close tabs on the profits and bank statements and also on the customers and marketing. Sometimes they act as part-time consultants to establish a start-up in the market. Sometimes it becomes difficult for an entrepreneur to meet all the expectations and to find out angle investors in the market. To raise funds one has to look in the right way. Before investment, wise angle investigates the entrepreneur, likewise, the entrepreneur should also find out about the potential business angel.
- Firstly, it is required to make sure that investor should be interested in the field one is starting up their business.
- A true prospectus should be given with the aim to achieve and way to achieve that aim.
- One should be clear about their beliefs and having a clear idea of using the money invested by the investors.
- A legal document stating terms & conditions should be established to avoid any legal issue.
- One must be aware of how to make negotiations and prepare yourself to go through meetings and expect failure.
- One can look up for investors online.
- The effective offer should be made and reasonable funds should be asking for.
- Legal advice can be taken.They are mainly patient investors, which remain invested for 4 to 6 years. On regular basis, they review the progress.
- A proper plan should be prepared. One should look up to similar startups and get to know about the angel investors who helped them by investing. It can help to get angel investors. To gain attraction one should make strategies for marketing, with this it will not only attracts customers but also investors for your business. Investors look for promising start-ups. For this purpose, marketing team should be set up.