Guru Q&A - Angel investors

Question

How will I know which business angels are an appropriate funding source for my company?

Answer

The simple answer is 'use your intuition'. Although simple, it is relevant – but it’s far from the whole story. Intuition can be an unreliable friend. So don’t rely on it entirely. There are other aspects to consider.

An angel investor might be a great opportunity to gain an advisor. So do your research. Is this person looking to just invest cash without any hands-on involvement – or can they contribute significant experience, knowledge, and networking opportunities, as well as the cash you need to grow your business?

Ideally you’d want both. Practically though you might not get both in one individual. Fair enough. Under such circumstances you might want a suite of investors. Some who contribute both cash and expertise and others who contribute the cash. You can never have too much cash whereas it is possible you can have a surfeit of advice.

Advice is ideal if it is relevant of course but can be problematic if there is disagreement on advice between two or more of your business angel investors. Sooner or later you’ll end up being a referee and that way you are bound to upset one of them, or all of them.

So to reiterate, ideally you want more that one business angel. Both provide cash and one provides expertise.