Our Investment Conference included a panel uniquely qualified to answer this question. The discussion, moderated by Jacqueline Watts of A City Law Firm, included experts from some of the UK’s top angel investment networks: Tim Mills of Angel CoFund, Ed Stephens of Angel Investment Network, Stephen Page of Startup Funding Club, and Roderick Beer of the UK Business Angels Association.
Angels are diverse… but getting younger.
Business angels come in a wide range demographics and specialisations, though the average range may differ from one network to the next. However, one trend noted in the panel was the decreasing average investor age. A few years ago, an angel was likely to be over 50 years old, but now the average is closer to 40-45.
The average angel belongs to one of three categories.
For all their diversity, most angels tend to fall under one of three categories:
Try to get inside the minds of each type.
Most angels are after tax incentives.
While many angels genuinely enjoy helping entrepreneurs build businesses, most are motivated at least partly by tax incentives. What does this mean for entrepreneurs seeking angel funding? Apply for the EIS and SEIS schemes as soon as possible. Not doing so will turn away many, if not most, of your potential investors.
Angel networks choose investors selectively.
Whatever their demographic or background, angels are generally expected to add value to your business beyond the cash they provide. This value might come in the form of connections, industry expertise, entrepreneurial experience, or all of the above.
To get angels’ attention, show that your team has ‘basic competence.’
In evaluating a business, 60-70% of an angel’s decision is based on the team. First, the angel wants to know if your team can make a good pitch and listen well to feedback. Then, they’ll check your pitch for signs that your team are bright, engaged, driven and adaptive—all necessary traits in an entrepreneur.
Beyond these basics, angels look for entrepreneurs who react well to unexpected questions. They might ask you something they know is difficult or impossible to answer solely to check how you handle it. Will you lie? Can you handle the unknowns? Or do you always think you’re right?
Reach out to angel networks sooner rather than later.
Unsure if you’re ready to start contacting angel networks? The panel agreed that sooner is better than later. When in doubt, get in touch and ask.
It’s challenging to appeal to individual investors you don’t know and determine who’s in the best position to help you build your business. The more you know about the world of angel investment in general, the better prepared you’ll be when you finally make a connection.
Looking for more tips to get investment-ready? Come to our 28th November workshop, ‘Getting Investment-Ready: Strategy and Valuation.’ The event will be held at London’s WeWork Moorgate and begin at 6:00 p.m. Get your tickets here!