How Can Angel Investors Add Value To Startups Beyond The $s?
In the initial stages, startups are in a vulnerable position and need sufficient mentoring to survive and scale heights.
Angel investors, as the term suggests, are individuals who invest their money, time and much else in startups with an intention to mentor and help them get off the ground. Even if their investment is low, the right angel investors bring in expertise and can mentor your startup in technical aspects, business development and so much more. This smart money is much more valuable than dumb money, which will just be $s.
Here are some ways Angel Investors could add value to a startup.
In the initial stages, startups are in a vulnerable position and need sufficient mentoring to survive and scale heights. Angels provide this much-needed handholding support. They provide valuable insights and invest time and resources to support startups.
Being seasoned entrepreneurs or experienced doers (founders or core members of startups) themselves, angel investors can bring in their valuable experiences about the obstacles and hardships they had to overcome in their own business or in their association with other startups. This will help you avert similar situations or be better prepared to handle them.
If your Angel is a seasoned practitioner in your start-up’s domain or industry, they will provide the necessary expertise in finding solutions to issues and other technicalities. Your startup may have come up with a product/ service as a solution to existing problems or needs.
A domain expert may guide you better on how to tailor it to be a success and have better market penetration, and in decision making. For example, if you are a non-HR team with an HR solution, bringing on board a senior HR professional would provide you valuable industry insights.
Business And Market Expertise
Angel investors can use their business and market expertise to support your startup in making important decisions. They can support you in making your business cost-effective and profitable and improve the efficiency of operations. They can help you achieve deeper market penetration, greater customer satisfaction as well as plan effective marketing campaigns.
Your team may not have the complete set of skills required such as technological, marketing, business, etc. An Angel with the necessary skills and experience can help you fill in that skill gap.
For example, if you are a team of special educators and educationists designing a technology-based teaching aid for young special students, bringing in an angel investor who is a software engineer or a leader in the technology sector will be beneficial and so will bringing in an angel investor who is a successful IT entrepreneur who understands costing and marketing of such products.
Contacts And Networks
Being an experienced doer, Angel Investors will have several contacts and strong networks that they can introduce your startup to, and help you build strategic partnerships.
They can introduce you to venture capitalists, credit institutions and other investors, to help you raise more capital for growth and expansion. They could subtly or overtly promote your startup and help gain the trust of various stakeholders. They can introduce you to potential customers or aid you in networking with them. Angels can also help you get some presence in the press and media.
Angel investors, being outsiders, provide a third-party evaluation of your startup. They often ask tough questions and critically examine your plans, work and execution. This is important for you to streamline your work.
Visibility And Credibility
Being associated with established Angel Investors and industry stalwarts itself gives your startup credibility and visibility. This may be advantageous for you to obtain additional funding in the future, garner media attention and bring established consultants (domain/ marketing/ sales, etc.) on-board.
In conclusion, bringing in the right kind of Angel Investors will go a long way in determining your start-up’s level of success and reach. Therefore, it is essential to look at the value your potential angel investor can add to your startup rather than the enormousness of cheque they can write or the $s they can contribute.
About The Author: This article is contributed by Prashant Pansare – Serial Entrepreneur & CoFounder at Eagle 10 Ventures.