As an entrepreneur, you have probably already heard of business angels. However, it is not so easy to define exactly what a business angel does and what you should do if you want to benefit from their involvement. Daniel Schäfer explains how you can convince business angels and what opportunities this can offer your business.

What is a business angel?

First of all: there is no such thing as the classic business angel. Clearly, we are not just talking about investors who invest in your company but otherwise offer no support. Business angels are much more than that, as they may even become part of your business and help you grow with their knowledge or network.

For a better understanding, let’s take a look at the most important types of business angels:

Type 1: The strategic business angel

This type of cooperation is about leveraging synergies. For example, your offering may fit well with the product range of an existing company, but that company does not want to develop a similar offering internally.

In these circumstances, it can make sense for a strategic partner to invest in your business and give you access to their market. Both sides benefit from such a collaboration without having to give up their independence.

Type 2: The ‘classic’ investor

This type of business angel sees your business as a worthwhile investment opportunity, for example because they want to expand their portfolio. Ideally, you receive additional capital that accelerates or simplifies the growth of your business.

In return, investors want to have a stake in your company and often even want to be actively involved in decision-making processes. This can be attractive for you, as long as you and the investor share the same vision for the company’s development. However, you should be prepared for the possibility that you may no longer be the only person making important decisions.

Type 3: Operational business angels

Operational business angels are usually former entrepreneurs who have a wealth of experience and a strong network. They want to make these skills available to your company and may even get involved in day-to-day operations.

Here, the focus is less on financial support and more on gaining contacts and expertise. However, the compensation is usually not a salary, but rather a share in the company for their involvement.

Here you can find business angels

A first simple step to find a suitable business angel for your business is obvious: check whether there are suitable people in your network or whether your contacts can recommend a potential business angel. You should definitely use this method because it is easy to implement, but be aware that it is a matter of luck whether you will find the right support this way.

It is much more effective to proceed strategically and first consider in which environments business angels who suit you and your business might be found. Business angels are characterised by being active for much of their lives, having influence, a powerful network, and usually considerable wealth.

It is therefore unlikely that you will meet such people on the standing terrace of a football stadium. If at all, they will be enjoying their hobby in the VIP lounge. However, it is even more likely that they move in circles that are not easily accessible to everyone.

These can in fact be very exclusive meetings, such as in business clubs or associations. However, there are also places with a lower entry threshold, such as golf clubs or flying clubs. Of course, a certain income or wealth is required for entry, but in principle these places are open to you and you can be sure that the clientele there at least partly consists of potential business angels.

The conditions under which business angels invest in you

You should be aware that experienced entrepreneurs are not waiting for you to approach them with your business idea. People who could be suitable business angels for you receive opportunities every day to invest their capital and expertise. They therefore filter long before a pitch whether you could be a suitable business partner for them at all.

So, for example, if you become a new member of a golf club, you can assume that the people who would be particularly interesting for your project will observe you closely to form an impression of you.

They will check whether you keep your promises, whether you proactively offer your support, and whether you can communicate clearly and understandably. Only when they are convinced that you have the right personality to develop a business successfully will they be willing to support you in business as well.

The most important advice for winning a business angel is therefore: first convince them with your personality and be prepared that you will only receive the right business support once you have succeeded in doing so.

Would you like to find out whether your business is already suitable for support from a business angel or discover how you can be even more convincing? We are happy to help. Let us find out together in a free and non-binding introductory meeting what we can do for you and your success.

About X-Group

Belief in your potential and a focus on the things that truly move you forward are the top priorities at X-Group GmbH in Berlin. You receive tailored support that identifies the most important bottlenecks. This way, you remove obstacles and can work purposefully towards your success.