Who are Angel Investors? Winged Friends of Entrepreneurs

Establishing a new business and bringing an idea to life is an incredibly exciting journey. Especially the start-up ecosystem, pitch decks and digital marketing have been quite popular in recent years. But let’s face it, sometimes the roads can be filled with financial obstacles on this journey. At this very point, there are special people who come to the rescue of entrepreneurs: Angel Investors! Although their names are “angels”, they are actually people from the real world who do not have wings, are generally experienced people who have achieved success in business life.

So who are these “angels”? What do they do, why do they do it and why are they so valuable to entrepreneurs? Let’s get to know angel investors closely in this guide and open up this mysterious world with a friendly conversation.

If you are an entrepreneur or have become interested in entrepreneurship, this article is for you!

It is a fact that; Angel investors act as a savior for early-stage startups that cannot get loans from banks or are not yet ready for large investment rounds. They do not only provide cash support; With their sectoral connections, experience in marketing and growth strategies, and business networks, they contribute to the financial and operational strengthening of your startup.

Angel investors usually make decisions by looking at the potential of your startup and the motivation of the founding team. Although investment amounts vary depending on the scale of the project, they can start from 50,000 TL and go up to millions of TL, depending on their belief in the business plan you present. In return for this investment, they prefer to buy shares in your company or accompany you on the road within the specified repayment terms. As a result, angel investor support is a valuable resource that both meets your capital needs and guides you to grow your business, standing by you throughout your startup journey.

So Who Are These “Angel Investors?”

Angel investors may be thought of as figures descending from the sky with bags of money in their hands, due to their name, but that is not the case at all. They are usually individual investors who have established and grown their own businesses, have a certain financial background and business experience. In other words, they do not represent a company or fund, they invest with their own personal money.

This personal investment situation is one of the most fundamental characteristics that distinguish angel investors from other institutional investors. They risk the money they have earned with their own efforts, which allows them to establish a more personal connection to the investment process.

The ventures they usually invest in are at a very early stage; maybe they are just an idea stage, or maybe they have launched their first product and acquired their first customers. In other words, these are the periods when the risk is highest and banks or large funds are not very keen.
Angel investors do not only bring money. They also offer their experiences, connections in the sector and mentorship, which are at least as valuable as money, to the ventures. For them, this investment is not only an expectation of financial return, but also a desire to support new ideas and dynamic teams.

Characteristics of Angel Investors

In short, angel investors are individual investors who combine financial power and business experience to invest their own money in early-stage startups that they see as potential, and provide them with mentorship and network support. They are experienced companions who are ready to support startups as they take their first steps.

Let’s briefly list the characteristics of angel investors:

• Being willing to take on early-stage risk
• Using their own personal capital as investment
• Being able to mentor with their sector experience and entrepreneurial background
• Creating business development opportunities by offering a wide business network and connections
• Providing guidance on growth and exit plans from a strategic perspective
• Targeting financial returns in return for shares or repayment terms
• Establishing a long-term business partnership and remaining in active communication with the startup
• Being a passionate supporter who believes in the startup’s mission and vision.

Why They Invest in Startups? Is It Just Money?

Of course, one of the most obvious reasons why angel investors invest in startups is the expectation of a potential high financial return. (The question of why startups fail is also important.) Although early-stage startups are very risky, their potential returns increase exponentially when they are successful. A startup’s value increasing ten, twenty or even a hundred times in a short time is a very attractive possibility for angel investors.

However, it would be a big mistake to think that this business is only about money.

Most angel investors are also motivated to contribute to the entrepreneurial ecosystem, support innovation and contribute to the technological/economic development of the country, even if only a little. They want to see a similar success story to their own in the new generation of entrepreneurs.

Another important source of motivation is the desire to be together with young and dynamic teams and share their energy and vision. After a successful business life, getting involved in new projects, gaining different perspectives and staying “in the game” is both enjoyable and educational for angel investors.

Many angel investors have a passion for transferring the knowledge and experience they have gained during their own business establishment processes to new entrepreneurs. Mentoring, guiding, helping them make the right connections is a source of satisfaction for them beyond money. Seeing their own contribution to the growth of a startup is a priceless feeling.

Finally, for angel investors, this is also a portfolio diversification and continuous learning opportunity. By investing in startups in different sectors, they spread their risks while also learning about new technologies, business models, and market dynamics. This feeds them both personally and professionally. In short, angel investors’ motivations go far beyond money.

Angel Investors and Others: What’s the Difference?

Angel investors are not the only players in the financial ecosystem, of course. There are also different sources of financing such as venture capital funds (VCs), banks, and credit institutions. But there are distinct characteristics that distinguish angel investors from them. The most basic difference is the stage they invest in and the type of resources they use.

• 1- Angels invest with their own money at the earliest stage (seed investment). Venture capital funds usually come into play at later stages (Series A, B, C, etc.) and manage large funds they collect from multiple investors. VCs have much larger investment amounts than angels and have more structured, longer decision-making processes. Angels, on the other hand, are more flexible and can make faster decisions.
• 2- Banks and credit institutions usually lend against collateral. They look at the repayment capacity and assets of the startup rather than its potential. Since early-stage startups usually do not have sufficient collateral, it is difficult for them to find bank loans. Angel investors, on the other hand, become partners in the company’s shares instead of lending, in other words, they become risk partners.
• 3- Angel investors usually establish a closer relationship with the startup after the investment, provide mentoring and can be more involved in the kitchen of the business (as an advisor, if not in the management). VCs, on the other hand, usually aim to be effective in strategic decisions by joining the board of directors, and focus on the big picture rather than operational details.
• 4- There are also differences in terms of risk tolerance. Angel investors can generally afford to take higher risks because they are risking their own money. They know that the probability of failure is high, but they are attracted by the potential return. VCs, on the other hand, have to be more calculating because they manage the fund and may look for certain success metrics or market evidence. These differences make angel investors indispensable for early-stage startups.

What Angel Investors Pay Attention To?

So, when you knock on the door of an angel investor as an entrepreneur, what goes through your mind while he/she listens to you? One of the most important elements that an angel investor pays attention to when making an investment decision, in fact the first one, is the team. No matter how brilliant the idea is, if there is no right team to bring that idea to life, to face the challenges and to carry the vision, they will not want to invest. The passion, competencies, harmony with each other and openness to learning of the team are very critical.

Secondly, the business idea itself comes. Does the idea solve a real problem? Does it appeal to a large enough market? Does it have a scalable structure? Does it have global potential, not just local? These are the basic questions on the investor’s mind. The originality of the idea and its potential to fill the market gap are important.

The size and dynamics of the market are also on the radar of angel investors. Is the market to be invested in a growing market? What is the competition situation? What are the shortcomings of your current competitors and how does your startup close these shortcomings? The future potential and trends of the market also affect the investment decision.

The traction that the startup has gained so far is also an important indicator. If your product or service has been launched, do you have first users/customers? Is a revenue model starting to take shape? Have you established important partnerships? Such indicators show that the idea is not just on paper, but has found real-life resonance and increase the investor’s confidence.

Finally, the exit potential is important for investors. In other words, how and when will the angel investor get their money back from this business? Does the startup have the potential to be sold to a larger company in the future? Or does it have a goal of going public? Having a way to liquidate the investment, that is, convert it into cash, is an important part of the decision for angel investors.

Where to Find Angel Investors?

Angel investors do not live in a place like the “Mansion of Angels”, of course! There are different ways to reach them, and these ways usually involve establishing an active network. The first places that come to mind are events where the startup ecosystem is lively. Startup competitions, “Demo Days” of acceleration programs, industry conferences and entrepreneurship summits are places where angel investors frequently appear. By attending these events, you can both learn and have the opportunity to meet potential investors.

Online platforms also offer important channels to meet angel investors. There are special angel investor networks or platforms (some of which have the status of associations). Here, you can introduce your startup, open an investment round and have the chance to make a presentation to interested angel investors. These platforms serve as digital bridges that bring both investors and entrepreneurs together.

In addition, incubators and acceleration programs are great environments to meet angel investors. These programs usually have their own investor networks and bring startups accepted into the program together with investors in this network. Participating in programs not only helps you reach investors, but also provides access to valuable mentorship and resources to help you grow your business.

Leveraging your existing network can also be very effective. Talking to entrepreneurs who have previously received investment, and asking for angel investor connections from mentors or industry veterans can be helpful. Remember, the principle of “people need people” also applies to entrepreneurship.

Angel Investors and Future Trends

You can also consider connecting directly (via platforms like LinkedIn), but if you choose to do this, make sure your presentation and preparation are very good. Angel investors are very busy people, and you don’t want to waste their time with an unprepared approach. The important thing is to show up in front of potential angel investors at the right time, in the right place, and with the right preparation.

Angel investors are important figures who can be a lifeline in the critical early stages of the entrepreneurial journey, adding value not only with financial support but also with their knowledge, experience and network connections. They invest in ideas that they see as potential and most importantly, the passionate team behind that idea.

If you are an entrepreneur and looking for angel investor support, you should first prepare your business idea, your market and most importantly your team very well. You should be able to clearly explain to the potential investor what you offer and why they should invest in you.

Remember, finding angel investors is a process. Patience, proper networking efforts and continuous learning are the keys to this process. Angels can be anywhere, as long as you take the right steps to find them and attract their attention with your initiative. Maybe the next “angel” is waiting to spread his wings to your initiative!