If the original investment sought is less than US$1 million, Angel Investors are the best option. They require a much less formal process than that required of private placement and venture capital. The profile of the typical Angel has shifted in recent years from that of a retiree looking to make a quiet investment to Angels who are willing to make a hands-on investment in an emerging company.
Angel Investors are becoming more significant by supplying small amounts of capital to companies that cannot be economically funded by the established venture capital market. Unlike investing in a managed fund, Angels make their own decisions about investments they make and engage directly in meeting entrepreneurs and seeing them pitch their business.
Angels also engage in the due diligence and investment process, and then follow their deal by taking a role on the Board or supporting the business, or may act passively as part of a group with a lead Angel taking this role on their behalf. If an Angel plans to stick around, the prudent company will establish a set of ground rules that state how and when the Angel will contribute to its growth.
Angels differ from VC firms not only in the size of their investment, but also in their approach. Angel investing is often called patient capital since Angels are less concerned with a rapid return and an exit and are prepared to support the business through its path to growth and exit over a longer time scale.
If you are just starting out on the road to seek Angel investment, you need to allow time in terms of preparation and accessing investors and you may need to pitch on several occasions before finding interest from investors. If you have immediate needs for finance, it is unlikely that equity finance is appropriate. As a guide, a minimum of eight weeks is needed from reaching agreement in principle to conclude all the due diligence and investment procedures, but this can vary tremendously according to the complexity of the deal and the degree of alignment between the investor(s) and the business. It is worth bearing in mind that it can take considerable time to reach an agreement in principle. From the first contact with interested investors to final investment, you could take three to six months.
At Azione, we can help you to find appropriate Angels for your project. If you can convince us that your project is worthy of receiving Angel funding, we can give you the opportunity to present your project to be visible to our network of Angels. We only select companies that we feel have the best chance of raising finance.
If however, we think your proposition has real potential for receiving Angel funding but you are not quite at the investment level yet, we will try to recommend someone from our extensive list of contacts that will be able to assist you to reach the investment readiness stage.
If on the other hand you are selected by Azione, we will invite you to put together a presentation which will be sent to every Angel for consideration. We will offer you some tips and guidance for the presentation and only present it to our investors when we are sure that it meets their requirements.
Our Angels are all accredited high net worth individuals or sophisticated investors, with an interest in investing in start-up companies.