3 tips for startups looking for angel investors
- What is the purpose of the investment? The right business angel can be an important source of support and help accelerate growth. Ask yourself if this is the right type of investment for your purpose.
- Have clear goals for how you will reach your vision. Don’t forget to anchor your vision with the market demands.
- Consider your needs. What knowledge or competencies are lacking in your company? Do the interested investors match your needs? Here’s an opportunity to fill a gap.
A powerful source of capital
Angel investing is a growing and powerful source of financing for entrepreneurs in the Nordics, and an attractive opportunity which many private bankers and businesses are eager to explore.
“Many experts see the Nordic market as the new diamond,” says Jacob Faber Andersen, Head of Startup & Growth at Nordea in Denmark. “There is an unresolved potential in Nordic startups that will mature over the next few years. At the same time, as an investor, it’s a good idea to spread your risk – making startups an attractive option.”
Business angels invest in startup companies in exchange for convertible debt or ownership equity. Both parties can benefit from early investments, especially when angels bring so called “smart money” to the table. Smart money means that in addition to monetary funds, the business angel offers skills, resources, networks, and experience— all of which is urgently needed during the early make-or-break growth phases of a startup.
Taking on the right investor is pivotal
However, not all matches are made in heaven. If interests are misaligned or experience is lacking, a hopeful match can easily take a turn for the worst. Something Jacob Faber Andersen has experienced firsthand: “Business angels who enter a startup with a completely different agenda, or an incorrect mindset, can ruin the entire business idea. An investment made without fully understanding the risks or how to monitor key progress indicators can quickly turn unsustainable for the business angel. An inexperienced startup, on the other hand, might take on too many owners, a lose-lose dilution that removes the incentives of both owning and running a business.”
Matching the right startup with the right angel is therefore of paramount importance. That’s why Nordea has partnered with Accelerace, one of Europe’s leading seed accelerators. Together, we have found a way to merge our networks and create value that both parties can tap into and ensure the right connections are made.
Creating opportunities for the right match
The Nordea x Accelerace partnership has resulted in an exclusive networking place where both existing and future business angels from Nordea private banking can connect with promising Nordic startups handpicked by Accelerace. Startups get access to qualified capital, and investors get the chance to support the companies and technologies of the future.
“We believe that all wealth starts in a company,” says Jacob Faber Andersen.”Angel investors can play a pivotal role when it comes to promoting societal change and developing future economies in the Nordics. The Nordea x Accelerace matchmaking program allows us to contribute to a tighter and more sustainable co-investment ecosystem.”
The program also provides guidance for first-time angels. People and businesses from Nordea Private Banking that are interested in becoming business angels receive education and expert advice on things like what to look for in an ideal match, how to make the investment sustainable in the long-term, and even when to say no.
A win-win for everyone involved
So far, the initiative has been very popular among both angels and entrepreneurs. At one of our recent matchmaking events in Copenhagen, pitches were heard from five pioneering startups with products ranging from a savings platform for children to a 3D printer for prototyping within the R&D sector.
“We have a technically advanced product, so the potential may be hard to understand, but at this event we could feel the presence of ‘angels’ with passion, expertise, and curiosity, says Maksym Plakhotnyuk, CEO of ATLANT 3D Nanosystems, who pitched at the event. “We’re a young company, so of course we need financial backing. But we also need people around us that can offer support in other ways, since we pave the road as we walk it,” he adds.
Among the potential business angels in attendance that day was Nordea private banker Lars Holtug, who was drawn by the opportunity to invest on a deeper level.
“Of course I want a return, but I can contribute more than capital,” Lars says. “I bring considerable experience from the auditing business to the table and can help them steer clear of the largest pitfalls. They bring innovative energy and entirely new solutions to needs and problems…it’s fantastic to help create a business from this starting point.”
“For me it’s all about getting really close to the company and helping them succeed, so I must also be a good match for them,” he adds. “This is where the network is a good opportunity to meet the right people both for the investors and the startups.”
To learn more about the Nordea x Accelerace matchmaking program, visit https://www.accelerace.io/nordea-accelerace-matchmaking/.
Interested in becoming an angel? Go to https://www.nordea.se/private-banking/ for more information on how to be contacted by Nordea Private Banking.
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