An angel investor is a wealthy individual who invests in startups, usually at the early stages of growth. By investing in startups, angel investors have the potential to realize greater returns than with more traditional investments. They also take on more risk—but by investing with lower conviction, they can reduce that risk while still having access to the most promising deals. Here’s why and how angel investors should increase their deal flow.
Why Angel Investors Should Invest with Lower Conviction
When it comes to investing in startups, angel investors should aim to invest with lower conviction than usual. This means investing in more startups at once rather than putting all their eggs into one basket. By doing so, they stand a greater chance of identifying the “big winners” from the get-go and reaping the rewards of those investments later on. Additionally, this strategy allows for greater diversification of their investment portfolio and potentially higher returns overall when compared to other types of investments.
How to Increase Deal Flow for Angel Investors
As an angel investor, one way to increase your deal flow is by building relationships with other investors and sharing great deals you come across. You can also look into venture capital firms and accelerators that specialize in startup investments or join forums or groups dedicated to angel investing and networking with peers/potential clients. Lastly, make sure you are researching trends in the industry and staying up-to-date on the latest news so you don’t miss out on any great opportunities.
Why Access is the Key to Successful Angel Investing
At its core, angel investing is about access—having access to quality deals before anyone else does. That being said, understanding how to increase deal flow is essential for finding quality investments that will produce high returns down the line. By utilizing these strategies outlined above, angel investors can be successful in their startup investments and experience real success as an investor.