Interactive resources for incubators and accelerators
Interactive resources for incubators and accelerators
Interactive resources for incubators and accelerators

Introduction to Angel Investing

This section provides an overview of what Angel Investing actually is, the role of an Angel Investor in entrepreneurial ecosystems and how to spot a good angel investor in action.

What is an Angel?

An Angel is an individual who uses their own money to invest in startups, usually in exchange for convertible debt or equity. A good angel investor is someone who takes the time to work out how to invest successfully.

What Makes for Good Angel Investing?

Angel investors are those that can recognise that investing involves significant uncertainty. They invest in sectors, geographies, or markets they already know or in which they are deeply involved or connected. They want to build a diversified portfolio through deep-dive due diligence and also will support the startups in which they invest in other ways like helping them develop out their financial projections or connect them with other investors that might want to invest in them in the future. Since these are higher-risk investments, Angel investors tend to set their expectations for their performance grounded in what they know about current market trends, economic projections, and geopolitical factors that might affect the success (or failure) of their investments.

Ecosystem Roles of Angel Investors

Angel investors are key for many entrepreneurial ecosystems in that they can (most times) be the first investor in a company and help decrease the risk for other investors who might want to enter at a later date. This decrease in risk helps in the overall success and growth of companies by allowing them the time and investment they need to get to a lower-risk stage to attract follow-on and growth-stage investors.

As mentioned above, they also help connect their startup companies to their network of investors and sometimes even accelerator programs to fill in gaps of funding and knowledge so that the founders and team of their startups can benefit from it and grow. Since Angel investors are so deeply embedded in their portfolios, they have a lot of knowledge and experience in the marketplace they can share with their startups as well as potential connections to new and external markets.


If the Angel investors are well-known in the investment field, just by being one of their portfolio companies can give that startup the edge they need to get meetings with other investors and or service providers like exporters and large distributors.


The Seattle Angel Conference: Seattle, Washington, USA

  • 1.

    The Seattle Angel Conference is a recurring Seattle Angel-driven event where the investors create an LLC, engage in due diligence of the applying startup companies, and ultimately pool funds to invest in one of the presenting finalists. It is the primary method Seattle Angel uses to find and fund new startups. The Seattle Angel Conference is open to any member of the community interested in learning more about both starting and investing in a new business and to hear the investment pitches from the finalists.


    They host sessions that can last up to 12 weeks and each session has around 20-40 investors who have $100,000 to $200,000 of investment capital to invest. So far they have connected 31 companies to investment through their sessions and have created a network of 350 Angel investors. The Angel investors are in charge of working together on providing the capital, doing the due diligence, choosing investments, and of course learning from one another throughout the process


    Source: The Seattle Angel Conference

  • A key takeaway from the Seattle Angel Conference is that you need to know the investor scene in your own country.

    Luni Libes, Fledge

Some key questions to consider before setting up an Angel network:

  • Is there a restriction in your country?
  • How many angels are there?
  • How many accredited investors are there in your community?
  • What size cheques can they write?
  • What is the appropriate size investment for your company?
  • What is the legal structure to bring investors together?
  • How much will the lawyer charge you to set it up even though it is not a company to comply with the law?


Some key questions to consider when trying to set up an Angel Fund:

  • Fund set up – what will be the legal structure of your fund and what investment tools will you be using?
  • What paperwork does the investor have to sign?

Some of the benefits to a conference approach when setting up an Angel investor network are that it creates more lead investors which means more perspectives on the market as a whole and de-risking the portfolio you wish to create together.

There is also a smaller overhead cost to investing and setting up an Angel investor network versus having individual Angel funds all operating separately. When working at a conference, Angels can learn from one another and can screen multiple companies together as well as have access to newer and earlier startups.

Startups will also have the chance to meet more Angel investors in one space and get their feedback through the due diligence process, making their ventures more investment-ready. Overall, the conference structure creates better deal flow for Angel groups and fosters more collaboration between investors.


In the US, angel investment activity is restricted by law (everyone has to invest in stocks, with exceptions only for those with +$1m USD in assets) hence it is very difficult for startups to look for investors with this regulatory hurdle.

Those who do, 99% of them do not invest in startups.

Another Approach to Starting an Angel Accelerator: Teach and Invest At The Same Time

There are some benefits to starting an Angel Accelerator program in that you have to find the investors first and then source the entrepreneurs based on the investors you get to commit to the program.

Recruiting Angel investors can take about 10 weeks of outreach, which can be done within your network as well as hiring and training an LLC manager to help you source for investors. For an Angel Accelerator, the type of investor you will be targeting will most likely be rich enough for $5,000 investment, but not able to invest $25,000 (a full-scale Angel).

Practical Tip

Some things to keep in mind when recruiting investors:

  • Not everyone invests in the same way
  • Be mindful about investor code of conduct
  • Have confidentiality agreements to build trust
  • Screen them and get feedback

Once you have your Angel investors, then they can pick the startups, which can take up to a few weeks’ time. During the program, the Angel investors can then be taught how to be a lead investor (someone who knows how to set terms, willing to use social capital to lead the deal for the next round) as well as learn about portfolio management and Angel Investing 201, assuming they have gone through the conference or know basics.

They should also be trained on mentorship so that they can work with the entrepreneurs 1:1 on a weekly basis during the program and add value to the entrepreneur. Once the entrepreneurs have graduated, the Angel investors can gather fellow investors to serve as follow-up investors for a capital raise. The total time commitment to launch and run an Angel Accelerator program is about 30 weeks, which includes visa waiting time for participants.

Benefits of Creating an Angel Accelerator Program

  • 01.

    Creates an Angel community

    One that specifically supports you and looks to the startup accelerator for deal flow. It will be easier to recruit and raise money for the next program.

  • 02.

    Creates lead investors

    Who pick up the burden of finding and providing follow-on funding for graduates.

  • 03.

    Creates a diversified portfolio

    The Angels quickly build a large portfolio of startups, rather than just 1 or 2 or 3. To make money, you should invest in ~20 companies.


Angel Investing 101

So you want to become an Angel investor? Here’s everything you need to know to get you started