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Startups

Why It's Hard to Find Angel Investors for Startups

Website networking can provide an answer to startups looking for investments and angel investors
Why It's Hard to Find Angel Investors for Startups
Image credit: Shutterstock
Founder at Cambassy
6 min read
Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

The world today is evolving, and everyone is going with the trend. Technology, for example, has brought a lot of changes that human beings never thought would exist. One thing in common about the trends today is they started as small startups. It was an idea adopted by a person or a few people, and then it took off the ground with investors finding it as a feasible one. One thing with investors is they look at the feasibility of an idea before they decide to invest or not. Investors who fund startups are known as angel investors.

With all the interested investors in the world, most startups don’t find angel investors to help fund their ideas. There are requirements on both sides. For the angel investors, there are things they require a startup to have for them to invest and to the startups, they also have their requirements of an angel investor. Remember this is business, and every party has to be keen no to giving in to the other one to an extent they are making losses.

There has been a shortage of angel investors in the world of late. It’s not a shortage per se, but startups don’t have means and ways to connect with angel investors. The angel investors on the other hand also don’t have a way to connect with viable startups to vet their ideas and if they are worth investing in.

Lack of funding is the most common challenge faced by investors. The lack of significant investment that an idea needs to get off the ground and angel investors are the best solution to this. However, getting an angel investor isn’t easy and requires a lot of work and effort. All of this because of the lack of a common website where investors and startups can connect.

Why Get an Angel Investor?

You should consider an angel investor if you are a startup and you don’t have the investments or the means to fund your idea. Angel investors have the funding required by small businesses with a superb organization and a great product but don’t have financial flexibility. The investors inject a good amount of money in the business resulting in fast growth and development of the small business.

Angel investors have the money and means to boost business, and they also have experience in the investments industry. The chances of a startup excelling under an angel investor are high because the investor has the experience and knowledge to know if an idea is a success or a failure. It’s hard for an angel investor to invest in a startup that is doomed to fail.

Angel investors like getting involved in the business and take time before choosing what to invest in. With angel investors, you have an experienced mentor guiding you and helping you make the daunting decisions that can be even more valuable than the financial investment.

Why Is It Hard to Find an Angel Investor?

One common mistake done by startups is not starting soon enough. Startups have several stages from the idea, in progress, product ready and in the sale. Most startups start looking for investors when the prototype is ready for sale, and this is a mistake.

The startups think that putting their idea down and developing the prototypes up to setting a business then start looking for funding is the best way to go. It, however, doesn’t work like that. As a startup, you have to start looking for funding immediately you have the idea even before you put it down. By the time you are getting to the final stage, you will have networked and connected with the finance community, and you have a few investors at hand already. This way, it’s much easier to secure the right funding for your idea.

One significant thing we have noted is there is lack of a website that allows investors and startups to find each other. One advantage of having a website where startups and angel investors can meet is making it easy for them to connect. You might have an awesome idea, and an investor has the interest and funding to invest in the idea, but you don’t have a way to connect.

Having a good website that connects angel investors with startups makes it easy for investors and startups alike. The investors can check out different startups and determine the one worth investing in. For the startups, they can also get the right finding for their ideas and as early as possible.

If an angel investor wants to know more about the startup, they request the startup directly from the website instead of trying to comb through the internet trying to find them and get more information from them. Most of the time, you find that startups need angel investors more than the investors need them. The investors have the money to invest, but unless a worthy idea comes their way, it’s hard for them to go looking for startups to invest in.

The Process

For startups, it’s good to understand that not every investor out there will accept to invest in your idea. It’s good to be ready for a ‘No’ here and there, but eventually, you will find the right investor.

It’s also good to understand the process and know it’s not an easy one. You don’t get to pitch an idea to an investor and get the funding. Even the right investor will have questions to ask and many more things to understand about the business as it is their money at risk here. It might take long and requires a lot of time. Looking for investors is like having a second job on top of the business you are trying to keep running, but you have to get used to it.

Having a website networking the angel investors and startups is the best way to go. It saves time and gets the startups the right funding without a lot of stress.

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