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How to Seek a Small Business to Invest In: Our Guide For Angel Investors

As an angel investor, you are always going to be looking for the next great business idea to invest in. Start-ups are everywhere and entrepreneurs are going to be skilled at pitching why they are the best option for your money. The challenging part is knowing which company to trust with your investment as you learn to seek out those small businesses that are going to become success stories and deliver returns for your investment. There is certainly no shortage of small tech businesses that need help. But which are the ones that could pay off? Here is a guide to the essentials for angel investors.

Know How Much You Can Invest

You don’t need to have access to significant funds to become an angel investor. The most common stage for angel investors to step in is on the ground floor, providing the capital that these tech businesses need to get their projects off the ground. But you do not need to be the sole source of their financing. You need to be crystal clear on how much you can afford to invest, and you need to communicate that to your potential business partners.

Consider Spreading Your Investment

It is not always going to be easy to find the perfect investment opportunity. There are so many of them out there, and if you put all of your eggs in one basket, you will be taking on a huge amount of risk. Essentially, your investment lives and dies with that one company’s success. This is why so many angel investors opt instead to go with an Enterprise Investment Scheme or EIS. With an EIS, your investment will be spread over a number of different tech start-ups that have been selected by experts. With Oxford Capital’s Growth EIS, the team have over 50 years of investment experience, and they will help you to take advantage of the UK tax incentives associated with the scheme.

Know Your Role

Some angel investors prefer to be completely hands-off once they have made their investment. Others are willing to act more as an advisor, using their experience in the industry to help the start-up through those early stages. You can be an invaluable sounding board for new ideas, and you may even want to be a board member. If you want to get more involved, you could also leverage your professional and personal network, as well as your social media presence, to help the company get its name out there.

Look For Expected Success

One of the common mistakes that a lot of first-time angel investors make is putting their return above everything. These investors will choose a start-up that is willing to offer them more of a percentage, but this is not necessarily the best way to go. The likelihood of the business succeeding is far more important than haggling over the terms. Given the chaotic nature of the market at the moment, this is more important than ever. Remember that a business that succeeds is always going to give you more in the way of profits than one that has big ideas but no plan for success.

Written by Marcus Richards

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