An Angel Investor is someone who invests in start-up/small sized businesses. Often, they are family or friends of the business owner.
Angel investors can give money on a one-time basis to the company, or inject it into the business over a period of time.
They are considered by many entrepreneurs as more favourable investors than venture capitalists, as they generally focus on helping the business get off the ground, as opposed to primarily focusing on net profit.
There are often preconceptions about what it takes to become an Angel Investor, which is why we’ve taken the time to research it for you!
There isn’t one set path to becoming an Angel Investor. While some investors come from tech backgrounds, others might come from a PR or education background.
However, there are clear similarities which they all possess: a grasp of finances OR a business background, and a passionate drive for success.
But what other qualities do you need to become an Angel Investor?
You should have a sound financial skill set and understanding, but that isn’t the only key to becoming a successful Angel.
An overall general feel for business and a grasp of the sector(s) that you are looking to invest into, are also requirements.
If you are unsure about a particular space, see if you can find someone who is an expert, to give you their thoughts. If you must, pay them even! That could be a relatively small investment that could help protect you in the long run.
You must be prepared to invest not only money, but also your time. It takes a lot of effort and time to go through each proposition, speak with the entrepreneurs and really get under the bonnet of an opportunity.
It’s also a good idea, if you’re planning on getting into investing, to have network connections. This will enable the company to grow quicker, and help it secure a place in the market.
Renowned Angel Investor David Rose describes how he got into the investing industry as a result of being a “third generation Angel Investor”, but reminds us that first and foremost, he is an entrepreneur himself. Being an entrepreneur firstly is a good way of having an insight into what investment companies need, as you will have already experienced this.
With so many routes into becoming an Angel Investor, it is apparent that no two investors follow the same path. But what they do all have in common, is a desire to support companies, and to see them grow; and hopefully make some decent returns.