Finding the Right Angel Investor for You Not all investors are created equal. Here are some tips on finding the best investor for your startup and its needs.

By Bo Yaghmaie Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Q: What is the best way to locate the right angel investor or venture capitalists?

--Ryan Spasic

A: Finding the right investors is really important. It's kind of like marriage. A great spouse makes for a great life, while a bad spouse could cause a lifetime of misery or an ugly divorce.

In finding the right investor, you're looking for a great, life-long partner and someone you can count on in good times and bad. So, chemistry is critical.

If you check the box on chemistry, you will want to find investors that will add bench strength to the management team. That is, investors with domain expertise -- either through prior investments or operational experience -- or investors with access to additional sources of capital that can further fuel your growth. The best investors will be able to advise you on strategy and help with introductions to potential customers, partners or key hires.

Related: 3 Tools Your Startup Needs to Raise More Money

With that in mind, how do you go about identifying and targeting potential investors? Let's start with angels. Angel investors can be hard to find but with a little bit of research you can typically locate individual investors who are interested in your business vertical or in supporting entrepreneurs in your community. Sites like Quora, CB Insights or AngelList are often useful. For example, you may query Quora with "the most active ecommerce angel investors." Look for investors who made early bets in companies that created new categories or otherwise had a real point of differentiation. That's usually a sign of insight and vision, not to mention courage to avoid just the "me too" investments.

In terms of accessing angels, the most common method is still via personal introduction. Scan your network for common contacts to ask for a referral. Talk to fellow entrepreneurs or startup-service providers to see if they may be able to make an introduction. Go to startup related events in your community to build your network in this area. LinkedIn and Twitter are also common ways to reach out to investors. While the hit rate is likely lower than with a personal introduction, more than a few companies have been funded by engaging and impressing an investor over social media. Another avenue to consider is angel groups in your community. Angel groups have a more structured pitch and investment review process and provide access to broad group of investors. Angel groups can often take a bit of time to make an investment decision, so keep that in mind when pursing this option.

Related: The 7 Elements Investors Look for in Your Funding Pitch

When assessing angel investors, you'll want to ask questions about their most recent investments, what they typically provide to companies in addition to capital, their expectation of CEOs and how involved to they like to be in the company, among other things. All of these questions can help you evaluate whether you and the investor are aligned and if it would potentially be a good partnership over the long haul.

Finding venture capital investors can be a less opaque process but the same principles apply. You'll want to find investors who have domain expertise and have portfolio companies that are complementary to yours. You'll want to gather as much information as possible about which venture funds are active in your business vertical and, more granularly, which partners at the funds made the investments in those deals. Secondly, you'll want to look at the size of the fund and the size of its typical investment. Again, online resources such as CB Insights, Mattermark and CrunchBase are useful tools for gathering much of this information. Once you've identified, you'll similarly want to leverage your personal network to find a personal referral.

And remember, if you're working with the right legal team, they are often the best gatekeepers when it comes to introducing you to venture and angel capital and can open many doors for you.

Related: What a VC Insider Learned in the Past 10 Years About Startup Funding

Bo Yaghmaie

Head of New York Business & Finance Group, Cooley LLP

Bo Yaghmaie is the head of Cooley LLP’s Business and Technology practice in New York and an active participant in the New York startup and venture capital ecosystem. He teaches at Cornell University Law School, serves as a Tech Stars mentor and regularly counsels leading venture-capital firms and a broad range of venture-backed companies from inception through transformative transactions such as financings, mergers, acquisitions and IPOs.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Business News

Zillow Predicts These 10 Places Will Have the Hottest Housing Markets in 2025

Zillow predicted that the hottest housing market of 2025 will be Buffalo, New York. Here's why.

Growing a Business

AI Adoption Doesn't Have to Be Daunting Anymore — Here's How to Choose the Right AI Tools For Your Small Business

As 2025 begins, AI adoption may still feel daunting for many business owners — but it doesn't have to be. Here's how to pick the best AI tools for your needs and integrate them wisely into your existing systems.

Science & Technology

5 AI Books Top Entrepreneurs Are Reading in a Rush for 2025

Entrepreneurs must embrace AI or risk falling behind. Discover 2025's top 5 AI books to gain a competitive edge, featuring insights from "The Wolf is at the Door" and a free AI Success Kit.

Leadership

Hard and Soft Skills Go Hand-in-Hand — These Are the Ones You Need to Sharpen This Year

The coming year promises to be one of change, which can be daunting and exciting. While it's important to stay on top of new technologies, the key will be sharpening those soft skills.

Marketing

Why 2025 Will Be the Year AI Redefines Content Creation and Search Strategies

Artificial intelligence and machine learning are transforming the SEO landscape, requiring professionals to adapt their keyword strategies, content creation and user engagement techniques in response to revolutionary tools like ChatGPT.