How to win Business Angels as Investors

7 TIPS TO RAISE A BUSINESS ANGEL ROUND IN 2023

For startups in their early stages, business angel investors are a great opportunity for early-stage growth. These are the 7 most important tips and insights from our expert Arnas Bräutigam.

For startups in their early stages, business angel investors are a great opportunity for early-stage growth. These are the 7 most important tips and insights from our expert Arnas Bräutigam.

At MotionLab.Berlin, we have supported many founders who were confident about their startups’ future. Many entrepreneurs believe that if you have a great product, investors will instantly start chasing you.

This is a misconception.

Having a great product does not guarantee you an investment; making the effort to look for the right investors, you would like to support your startups’ success, is what puts you on the right path!For startups in their early stages, business angel investors are a great opportunity for early-stage growth.

WHAT ARE ANGEL INVESTORS?

Angel investors are high net worth individuals who provide a financial backing for young startups, in exchange for equity in the startup.

Angel investors are high net worth individuals who provide a financial backing for young startups, in exchange for equity in the startup.

Typically, angel investors make this investment out of their own pockets. The funds may be a one-time investment to help the business get off the ground, or an ongoing injection to support the startup through its difficult early stages.

Getting an angel investor onboard is an achievement for any startup, which is why we got Arnas Bräutigam from AddedVal.io to share 7 hacks on how to raise a business angel round.

AddedVal.io is a platform that connects startups with angel investors.

UNDERSTAND WHETHER YOU NEED AN BUSINESS ANGEL INVESTOR OR VC

Whether you choose VCs or business angels, find out where you can find them with these hacks!

Whether you choose VCs or business angels, find out where you can find them with these hacks!

There are many angel investors, however they are typically hard to find because they do not have websites nor do they advertise themselves as businesses.

VCs are institutional investors with a website, social media visibility, and they attend conferences to scout for innovative startups. They can be easy to find, but very difficult to convince.

The best place to find angel investors is at private social clubs, on platforms such as AddedVal.io, on LinkedIn, in databases and news articles.

The hack here is to:

Look for angel investors on different platforms or by reading news articles to find out where those angel investors invest.
When you talk to one angel investor, you should always ask for an intro to another one because most angels know each other.
Mobilise Google or LinkedIn for your research:
Google - if you search “business angel site:businessinsider.de” your results will only feature articles about business angels.
LinkedIn - if you type in “business angels” in the search tool, you should get an extensive list of angels.
Additional tip: Check out the list of 150 active business angels AddedVal.io created.

USE AN INVESTOR FUNNEL MANAGEMENT TOOL

Fundraising is like a sales process, you always start with a long list of investors that becomes shorter and shorter as you move down the funnel, until you end up with a few investors closed.

It does not matter what kind of tool you use: it can be an excel sheet, notion database or sticky notes to visualise your funnel. What matters is to track your progress so that you don’t miss out on an opportunity by forgetting to follow up.

GET INTROS TO BUSINESS ANGEL WHENEVER YOU CAN (AND TRACK THEM)

You just spoke to a business angel, VC or a founder who recently received an angel investment? Great! Now ask them for an intro to other angels in their network!

You just spoke to a business angel, VC or a founder who recently received an angel investment? Great! Now ask them for an intro to other angels in their network!

Intros are much more effective than a cold outreach because personal connections go a long way. However, they can take time as they are dependent on your personal contact.

If you don’t have a personal contact who can connect you to business angels, cold outreach via LinkedIn or email is still an option as it is quicker, and you can do many outreaches.

Make sure you track your outreaches as per tip #2.

PERSONALISE YOUR COLD MESSAGES

Be personal and individual
Show your interest in the angel by referring to some information you know about them.
Keep the message short, clear and fact based.
Convince with numbers, e.g. traction numbers and KPIs.
Use reverse psychology questioning methods such as, “Would it be too much if I sent you our pitch deck?”.

UNDERSTAND THE BUSINESS ANGEL MINDSET

Angel investors are a heterogeneous group of people. Find out how and in what way they want to support your startup and what their wishes are in terms of the investment.

Find out how and in what way the angel investor want to support your startup and what their wishes are in terms of the investment.

Angel investors are a heterogeneous group of people. They are from different genders, diverse backgrounds and will have different reasons for investing in startups. Understanding the motivation behind investing in the startup is important because it prepares you for speaking to the investors.

Some angels want to support the startup with operational activities, whereas others do not want that at all. It’s hard to get this information beforehand, therefore when you’re in a meeting with an angel investor, find out what kind of angel they are so that you can respond accordingly.

If an angel is interested in getting their hands dirty, you can then list ways in which that angel would be involved in your startup if they invested in it. They will be more willing to do so if they know that their wishes will be met.

POOL YOUR BUSINESS ANGELS

Business angel pooling is a way to aggregate smaller tickets into one pool so that your cap table stays clean.

The benefits of this are:

DON’T ASK FOR MONEY DIRECTLY

When you ask for money, you get advice. When you ask for money, people will be reluctant to make such a big decision very fast. Therefore it’s more advisable to take time to ask the business angel in your network for advice so that when you’re now raising, you can let them know and they will probably be more open to investing.

THE BOTTOM LINE: PERSISTENCE IS KEY

Raising money isn’t easy. There is a solid reason why most startups fail right when they need a cash injection. Keeping these 7 tips in mind will inch you closer to landing your angel investment.

The key is to be persistent and never give up.

By following these tips, you have a very good foundation to raise your next business angel round. The tips already provided a huge value to our current and past accelerator cohorts and our community.

P.S. To additionally optimise your investor search, tap into the AddedVal.io product offering. Not only do they give you access to thousands of business angels, they also support with intros and even provide pitch deck feedback. A big win!

Raising money isn’t easy. There is a solid reason why most startups fail right when they need a cash injection. Keeping these 7 tips in mind will inch you closer to landing your angel investment.

The key is to be persistent and never give up.

By following these tips, you have a very good foundation to raise your next business angel round. The tips already provided a huge value to our current and past accelerator cohorts and our community.