Angel investors are a misunderstood bunch. They’re often portrayed as rich people who only want to make money from startups, but in reality, they have multiple reasons for investing.
Indeed, Startup Investment is a great way to make money. Many Angel Investors get into Startup Investment to diversify their portfolio and take advantage of the high-risk, high-reward phenomenon. But investing in startups has more to it. For some Angels, the objective is to give back to the entrepreneurial community.
Generally, Angel Investors are the ones having a track of successful business. Over their entrepreneurial journey, they learn valuable lessons. Acting as patrons and mentors, Angel Investors often act as ‘Guides on the inside.’ For some Angel Investors, the incentive of investing in a Startup is the opportunity to keep up with the industry and network with emerging leaders.
Some might be into this for high returns, and others might be interested in personal growth or building relationships with the founders of the companies they fund. If you’re thinking about becoming an angel investor or you are a Startup founder looking forwards to understanding what Angels have for themselves in your Startups, here are six myths about this exciting world that you must not approve of:
Myth 1: Angel Investors need complete control
Angel Investors don’t ask for complete control in a Startup. They understand that the Founders have ideas about how to run their business and want to ensure that they’re not being pushed out of it by someone else.
Angel Investors are looking for an opportunity to be part of something great, so they’ll usually be willing to give up some control if it means being able to participate in the success of a company they believe in.
Founders, Angel Investors know what it’s like to be at the top of their game, how to manage risks, and how to adapt a startup for success. They’re not going to try to control every move you make but will want to participate in the overall growth of your business.
Myth 2: Angel investors are too busy and no longer play an active role in startups.
As a result of their success, many angel investors have become extremely busy and are no longer actively involved in the startup community. However, this is only sometimes true. For example, many angel investors still participate in local meet-ups and invest in other startups outside of their own portfolio companies. Additionally, some angels act as mentors or board members for other startups and host events like demo days to connect founders with more experienced investors who may be interested in investing.
Myth 3: Angel Investors should be in Silicon Valley.
When most people think of angel investors, they imagine a bunch of rich guys in Silicon Valley. They believe that if you want to be an angel investor, you must move to California or at least know someone there.
But that’s not the case at all! You don’t have to live in Silicon Valley—plenty of angels worldwide exist. And even if you want to set up shop in Silicon Valley, there are plenty of ways to meet other angels who can help fund your startups and grow your portfolio.
Angel Investors are an excellent source of funding. They provide the capital Founders need to help them get a startup off the ground and make it profitable.
But where do you find such investors? Both individual and angel groups are constantly in search of an exciting startups.
As the name suggests, an angel group is a group of angels who come together to support a startup. Google the list of angel groups or try looking for them on LinkedIn.
Myth 4: VCs are smarter than Angels
This is a myth. VCs are no smarter than angels. They may have more experience, but that doesn’t make them any smarter. Angel investors have the same level of intelligence as VCs and, in some cases, even more so!
VCs have more experience than Angels. – This is another misconception about angel investing because it assumes that all angels are newbies or beginners at investing compared to venture capitalists who have been around for decades and know what they’re doing when it comes to making investments in startups and companies with potential growth opportunities (for example Uber).
But this isn’t true either—some angels have been active investors since the 1990s; others started investing right after the internet bubble burst in 2000; others still got into the game during its peak phase between 2005–2009.
Myth 5: Angellist and Deal Flow platforms’ Startups are not that good.
Indeed, the AngelList platform is one of many places to find startups. Many other sources of great deals are often overlooked. Deal Flow and Matchmaking platforms are excellent sources for finding high-quality companies in need of funding. Your job as an investor is to find deals that interest you and then determine whether they’re worth investing in.
Introducing Startup Steroid – Deal Flow Platform: Startup Steroid is a great place to explore and screen exciting Startups. The good news for Startups is that the platform offers free registration.
And there you have it. Angel investors aren’t the mythical creatures many people think they are. Everyone aims to make a fortune out of their investment, but Angels are not just about funds.
They bring onboard SMART capital, which is highly important for early-stage Startups.
I’m the co-founder of Startup Steroid. Being a founder/ co-founder (of multiple businesses) and investor (in multiple startups) myself, I experienced the challenges that an investor and a founder face. So, we built a network of 2,000+ Investors, Startup Founders, and Ecosystem Partners since its foundation and still growing. We empower innovative ideas by providing direct access to smart money and meaningful networks.
I am also the CEO of SPV Hub.