In my opinion, 2020 will definitely be remembered as a big year for angel investments. I, Ofir Bar, am an angel investor myself, with a track record in the fields of real estate, digital entrepreneurship and technological startups. I can tell you that for many young innovators, the term ‘angel investor’ did not mean anything, just one year ago. You can be sure that today, they all know what we’re talking about.
So, what is the profile of an angel investor? Where does their money come from? What is their role? What do they get out of the process? And, most importantly for you if you’re an entrepreneur yourself, how can they be reached? Let’s try to answer these questions and others.
Who are you, angel investor?
You might be surprised to learn that an angel investor is not necessarily an extremely rich person. Being an angel investor is more of a character, rather than a pocket full of cash. This is usually a person with an eye for attractive investments and a desire to take part in it – not just by giving money (but more on that later).
Regarding demographics, there is not much we can say about angel investors. It is a common mistake to think that it is more of a masculine profession, or that it is more typical of a certain age group. As a matter of fact, the term “angel investor” can even refer to a group of people, making joint ventures and investments together.
What do you have to offer?
Don’t be mistaken – an angel investor is not here to solve all your financial problems on the way to success. They can certainly give you enough spare change to help you through the initial period of setting up and understanding your path. But in general, they are a stepping stone to raising a much larger amount of capital, usually from a big financial body.
However, angel investors offer something other than money – something that some may say is worth even more than money. These veteran investors offer their time and experience, as mentors to your business. It can mean weekly meetings or just sporadic phone chats when you feel the need to get some advice or inspiration. Use them, they know a whole lot about how things work in this industry and it can really benefit you.
What do you want in return?
Let’s not fool ourselves. No one is on this ride because of their kind heart. An angel investor puts their trust and funds in you, since they believe you are going to succeed. And when you do, that investor expects to see profits as well. This can be in the form of an interest on a loan paid back, or perhaps equity in your company. Either way, it all must be agreed upon ahead of time and put to paper, to avoid any disagreements in the future.
Oh, and speaking of legal agreements, it would also be wise to officialize the working relations between you and your angel investor. Some investors prefer to take on a more passive role, while others desire to be part of board meetings and weekly sessions. Either way, it should be one of the first things discussed between you and your investor.
How can I find you?
Thanks to technology, this is much simpler than it used to be. Angel investors like me can be contacted online via our social media profiles and websites. Other than that, there are quite a few networks dedicated to making the connection between entrepreneurs and investors. Just make sure that when you approach a potential angel investor, you do it with a properly drafted pitch – and that you have a detailed business plan ready.
If you want to take a more traditional path, there are numerous annual conventions being held around the world, focused on innovation and startups. You can count on plenty of angel investors to be there, looking for their next opportunity, or to send someone on their behalf to do so. My final advice to you would be to approach with confidence and courage – that is something that I, Ofir Bar, as an angel investor really admire when searching for potential investments.