Angel investors are usually the first to invest in a business, helping thousands of UK startups to launch every year.
Within the world of technology journalism, you tend to hear a lot about startups and venture capitalists. However, angel investors rarely seem to get the coverage they merit.
Angel investors are usually the first to invest in a business, during the seed round. They invest about three times the amount venture capitalists do, and are crucial to getting thousands of UK startups off the ground every year. Angels invest on average £42,000 per company, usually in return for a stake in the business.
But who are they? Why do they choose to invest in startups? And how do you go about becoming an angel investor? Read on to find out all you need to know about angel investors.
Who are angel investors? Why do people choose to become investors?
There is no ‘one size fits all’ type of person who becomes an angel investor in tech startups. Although it isn’t mandatory, most tend to have worked in the industry for at least a decade, and many of them have set up their own companies.
But why do they choose to become investors? Obviously there are potentially large financial rewards on offer (with a big dose of risk). However, it’s also fun, keeps you at the forefront of the latest advances within tech and can be rewarding emotionally too, according to the 12 angel investors Techworld spoke to.
“It’s a way to give something back by helping founders of startups,” says Steve Feldman, who has invested in four UK companies.
“For me, investing allows me to meet these people with the ideas and passion to achieve something different. It’s not about finding the next unicorn, it’s about helping those attempting something meaningful to reach the next stage,” says Pip Wilson, founder of divorce app Amicable.
Investing also lets you help a sector or region that is close to your heart. “For me the appeal is being involved with something bigger, companies looking to improve an existing space and investing in local companies based in the North West,” says Chris Haslam, founder of Ixis.
How do angel investors evaluate startups?
Every angel investor is different, so inevitably the approach to startups varies from person to person.
However, most agree that the first step is to do plenty of research, and all emphasise the importance of a good business model to their decision.
“I evaluate the business model of the company to understand its viability and potential for growth. I also like to meet the CEO and management team to understand their ethos and approach to the business and to the industry,” says Russ Shaw, founder of Tech London Advocates.
“I invest in companies that…