You’ve toiled with your idea. You’ve surveyed potential customers and clients. You’ve created an MVP. You have spent countless hours working on your business. Now, you need some funding for your company.
Angel investors can be pivotal in providing the financial support and mentorship needed to fuel your business’s growth. Angel investors have much more to offer than just funding. They typically become involved in the business — a value-added element of Angel investing if you are open to being advised and can embrace shared decision-making.
Knowing when you’re ready to pitch to angels is an essential discussion for you, any co-founders, and close advisors to have. You might raise an investment round when you have proven to investors you can realize your vision or the opportunity has a market large enough to sustain a business. Investors may enter the business when you have identified and mitigated enough risks to invest their money.
Where to Find Angel Investors:
Angel investors are typically formally educated, high-net-worth individuals who invest personal funds at arm’s length in businesses owned and operated by unrelated individuals. To invest in this asset class in Ontario, the Ontario Securities Commission must recognize you as an “accredited investor” (defined by the Ontario Securities Commission’s Rule 45-802). All this means is a wealth threshold to say that you, as an investor, have enough net worth to sustain the risk of this asset class.
There are several places where you might find angel investors.
Angel Investor Groups:
Ontario has a network of angel groups. There are 17+ angel groups right here in the province. From Windsor to Northern Ontario, there are angels all over. You can find a list here. These groups often pool resources and expertise, making them an excellent source of funding and support.
Since there are angel groups across the province, start by connecting with your local angel group. You may be able to get a warm introduction from an incubator or accelerator program you have participated in or from other advisors of the business. The best way to be introduced to another angel group is through an angel group!
There are numerous benefits to working with an angel group. Angel groups gather interested investors to review deals. Pitching to an angel group allows you to pitch to many investors simultaneously. Also, when you pitch to an angel group, you can feel comfortable knowing that all members of an angel group are accredited investors.
Angel groups offer access to capital and advice, mentorship, and connections into the industry. Angel groups often have access to resources that can be helpful for startups, such as office space, legal assistance, and marketing resources.
Networking Events and Conferences:
Attend industry-specific conferences, networking events, and startup meetups. These gatherings provide valuable opportunities to connect with potential investors who share an interest in your field. Engage in conversations, pitch your ideas, and build relationships.
Leverage online platforms designed to connect startups with investors. Websites like AngelList, FrontFundr, and Equivesto serve as matchmaking platforms where entrepreneurs can showcase their startups and investors can discover promising opportunities.
Incubators and Accelerators:
Many startup incubators and accelerators have established networks of angel investors. These programs offer mentorship and other resources and also increase your visibility among potential investors associated with these organizations.
Tap into your educational and professional networks. Alum networks often include successful entrepreneurs who may be willing to invest in promising startups. Leverage the power of shared experiences and common affiliations.
Tips for an Efficient Fundraising Process:
Now that you know where to find angel investors, here are a few tips for managing that process.
Raising money takes work. It can be a very frustrating process, and much of the frustration can stem from how surprisingly messy fundraising is. One way to remove some of the frustrations that come with this process is to fundraise efficiently by considering it as a sales process.
Build a list of potential investors – build your “sales funnel.” Raising capital is a “numbers game,” you will have to reach out and pitch to a meaningful number of investors at the top of your funnel to end up with a handful of checks dropping out of the bottom. Jeff Bezos famously pitched over 60 investors to raise Amazon’s first $1 million. This dynamic holds for later rounds as well.
As you work on your list — and later, as you start pitching — the complexity of keeping track of all the names, conversations, follow-ups, and to-do items will grow exponentially. Keep track of your funnel with an Excel sheet or even look into a simple CRM system. You will need a plan to manage your fundraising process.
As a founder, I will leave you with one piece of advice. Trust your gut. You can say no to investors just as much as they can say no to you. You will be in a business relationship with your angel investors for a long time, so make sure you like them!
According to the National Angel Capital Organization (NACO) ‘s 2021 Report on Angel Investing in Canada, only 6% of entrepreneurs who initially approached structured angel groups for investment received funding. However, entrepreneurs who do not receive funding often receive valuable feedback and access to a network that can help them become investment-ready and accelerate their businesses. It is not just about the funding; it’s about finding investors who believe in your vision and can contribute to your entrepreneurial journey.
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