Every startup needs at least one person to believe in the vision—and of course, they need some money, too.
Angel investors—accredited investors who are willing to put their money into early-stage, risky, or unproven ventures—are known as angels for a reason. For entrepreneurs who need investments to take their business to the next level but may not be eligible for other funding sources, angels can be a saving grace.
For local entrepreneurs, Nebraska Angels is the most prominent group in the area. I spoke with Stephanie Luebbe, the organization’s executive director, about what entrepreneurs looking to raise angel capital need to know.
“The types of companies that benefit most from angel investors are ones that can scale quickly and without a lot of capital,” Luebbe said. “For example, a lot of tech-based and software companies fit these criteria. We don’t typically see lifestyle companies go down the path of raising financial investors.”
Angel capital is most often awarded to companies which operate in growing or thriving markets, have an experienced team, and have a small but established customer base. As Luebbe made note of, the company must also be ‘scalable,’ or have the potential to grow exponentially.
Nebraska Angels also provides a comprehensive checklist of things to consider before looking for an angel investor.
If you meet all of the criteria, it’s time to start connecting. The best place to start is by finding your local or regional angel group. There are angel investment groups in every U.S. state. Some are specific to location, while others specifically work with women or other underrepresented groups. Check out this list for all groups associated with the Angel Capital Association.
In addition, there are online services where experienced investors and entrepreneurs can connect. AngelsDen and Angel Investment Network are examples of these platforms.
The application process looks a little different at each investment group. For Nebraska Angels, entrepreneurs must submit a pitch deck, a term sheet, cap table, and historical financials from the past three to five years. They are also encouraged to submit an elevator pitch and a customer reference list.
If approved, the screening committee will meet to hear the pitch and ask questions. The committee will then decide which companies will continue on to the monthly angel meetings. Selected companies will then pitch to the larger group, and individual angels will decide if they would like to invest.
Even if you are not at the stage of applying for investment opportunities, Luebbe says that making connections with angels early on in the process can be greatly beneficial.
“It’s never too early to reach out,” she said. “We love getting to know early-stage founders, oftentimes before they are even looking to raise capital.”
Luebbe is happy to personally answer questions and connect with entrepreneurs. She can be reached at firstname.lastname@example.org.