Getting Started with Angel Investing

In some of our messages across social media, you might have seen us mention the term “Angel Investing” a couple of times. We even made a pledge to make you an angel investor in your own right.

Now that you are aware of a few tips as regards getting into startup investing. If you missed this, read up here

What exactly is angel investing? Who is an angel investor?

I am here to break it down for you as much as possible.

An Angel Investor is an individual who provides funds or financial backing for startups or entrepreneurs typically within the first 3 years of building the company.

Angel Investors provide these funds in exchange for equity in the company and at an early stage, they comprise of family, friends or within a network.

Startup investing is a very risky strategy and long term in focus. As an angel investor, there is a higher possibility of losing all the funds invested in a startup at a very early stage.

So you might ask, why do these individuals choose to invest in these startups at this stage?

Essentially, Angel investors have two things that enable them fund startups. Finances and Motive

There is a saying, “Never invest money you aren’t willing to lose” and this applies to angel investors a whole lot. This means the funds being put in at this stage might not fully be essential to their daily well-being. This is where their motive for funding comes into play.

With the possibility of an investment being lost, Angel Investors always have a specific motive for wanting to invest in a startup. This can be either through a shared vision/goal of the future, or a member of the family supporting the startup. Here are different categories of investors:

• Family and Friends Investor: These investors might not be your average everyday typical angel investors but rather a supportive family member/friend that “knows” either the founders/founding team of the startup. Their investment in the startup comes from a place of support and trust.
• Community Investor: These investors come from the community around the founding team either as former colleagues, business friends, friends of friends etc. They may or may not understand what your new company is doing but they or someone in their direct network has had a good track record of working with one or more members of the founding team and as such leads them to supporting with funds.
• Idea Investor: These investors are individuals who are very familiar with your idea and the solution you are building. It could be someone who has had the idea to build a similar solution but couldn’t due to several reasons or someone who is very familiar with the market you intend to penetrate and wants to support the startup and its solution.

Who Can Be an Angel Investor?

Initially, Angel investors were individuals who were willing to drop amounts ranging from $5000 upwards in startups.

But with the help of platforms like GetEquity :), anyone can be an angel investor. That’s right, anyone.

This in turn helps foster faster innovation and growth in these startups as they now have the ability to raise funds from a wider pool of individuals. With angel investors, like you or I also supporting them with as little as $10.

In our next article, we will be diving into the technicalities of angel investment and getting familiar with some terms and keywords used.

See you soon!!

Got any questions on this, please send us an email at support[at]getequity[dot]io and the team will definitely get to you.