A comprehensive guide for Founders on the who, what, and why of Angel Investing.
Ever wonder what's common between Google, Apple, and Meta - apart from being major multinational enterprises? It's that they were all funded by angel investors in their early stages of growth.
While the burgeoning popularity of subscription-based financing has led to questioning traditional options, angel or 'seed' investing continues to remain a viable choice for founders in their early stages. What's more, seed funding deals in India raised a whopping 746 crore in the year 2021 alone!
This brings to focus the merits of angel investing and how founders can leverage this funding option to accelerate their start-up's growth. In this article, we will be walking you through the basics of what angel investing is and whether you should (finally) take that leap. Let’s dive in!
Think of angel investors as high-net-worth individuals who fund a company in its early phases. They invest their own money, usually in exchange for equity or debt. This initial support catalyzes economic growth and helps bring the funded company's vision to fruition over time. Unlike a Venture Capitalist, angel investors take a leap of faith at a stage where most VCs would be hesitant to do so; albeit with a smaller amount.
So, who exactly can be called an angel investor?
As of 2022, most angel investors usually don't demand more than 20-30% of company shares. Here's what the investing process would be like for a founder:
While the process is straightforward, the real deal lies in finding a befitting angel investor.
Angel investors assist start-ups in their seeding stage- after the founders have raised initial capital, and before Venture Capitalists are approached. In these critical stages of ideation and/or validation, angel investors spawn the company's growth.
How, then, can you find one for your start-up?
The best way to begin searching for them is within your vicinity. Approaching capable investors within your community by word-of-mouth, through local seminars, referrals, online forums, and business conventions is your best bet. Remember the phrase 'your network is your net worth?' Exactly.
Likewise, the brand's visibility in the market can come in quite handy when approaching via these platforms. Looking for prominent investors in your industry or domain will ensure you get the perfect mentor who assists your journey with more than just funding.
Angel investor platforms like LetsVenture, Ahventures, AngelList India, and Indian Angel Network are also great networks for owners to explore and connect with leading investors in their domain.
Alternatively, LinkedIn is a reliable platform where founders can directly approach the angel investors that they would like to close a deal with.
As Bill Gurley rightly said, "Having an investor who is naive about public markets or finds them complex or scary is non-optimal."
Nonetheless, there is a way to overcome these disadvantages in 2022- and the answer lies in subscription-based financing.
Equity is expensive. While angel investing allows founders to raise capital initially, giving away even 5% of equity means that the person owns that portion of your net worth and profits forever.
What if there was a way to acquire capital without fear of dilution or debt? That's where subscription-based financing steps in. Platforms like BridgeUp allow companies with recurring revenues to raise capital fast- with no external pressure and room to grow at their own pace.
Explore the seamless world of subscription-based financing with BridgeUp- India's first recurring revenue platform that helps you scale faster and better. To know more, call us on +91 -9819660287 or drop us a query on the contact form here.