SeedBlink Blog

When founders are in the early stages of building their startups, one of their biggest challenges is securing the necessary funding to turn their ideas into reality.

Beyond family, friends, and other familiar sources of capital, angel investors can be an appealing option. These individuals invest their wealth in promising startups, often at an early stage before larger venture capital firms take notice.

In this article, we’ll explore the advantages, disadvantages, and everything in between to help founders navigate the world of angel investing.

Angel investors often offer speed, flexibility, and personal involvement that larger institutional investors might not provide, making them an attractive option for early-stage startups. Let's take a closer look at the pros and cons of angel investing:

Advantages of angel investors:

• Speed: Angel investors can often provide funding more quickly than institutional investors, which is crucial for startups needing capital to seize time-sensitive opportunities.
• Flexibility: Angels tend to be more flexible in terms and conditions compared to institutional investors. They are often willing to accept higher risk in exchange for the potential of significant returns.
• Equity expectations: Angel investors typically expect equity in exchange for their investment, usually ranging from 5% to 15% in pre-seed rounds and 15%-20% in seed rounds, depending on factors like investment size and company valuation.
• Personal involvement: Angels are often deeply invested in the success of the startups they fund, providing valuable advice, mentorship, and support.
• Less bureaucracy: Deals with angel investors usually involve less paperwork and fewer formalities, streamlining the fundraising process.
• Industry-specific knowledge: Many angels specialize in certain industries, offering insights and connections that can be invaluable to a startup’s growth.
• Bridge to future funding: A successful angel round can validate a startup's potential and attract larger institutional investors in subsequent funding rounds.
• Local focus: Angel investors often focus on startups in their geographic region, which can benefit companies seeking local market expertise and resources.

Disadvantages of angel investors:

However, alongside the advantages come a few challenges, such as less structured support and the potential for investor interference:

• Less structured support: Unlike VC firms, angels may not provide the same level of structured support, such as dedicated legal, marketing, or recruitment teams.
• Fragmented funding: Raising significant capital from multiple angel investors can be time-consuming and result in a complex cap table.
• Potential for interference: Some angel investors may want to be involved in the day-to-day operations, which can create conflicts with founders.
• Lack of standardization: Terms can vary widely between angel investors, leading to complex legal and financial structures.
• Potential conflicts of interest: If an angel invests in multiple companies within the same industry, there may be conflicts of interest or divided attention.

What type of rounds are angel investors interested in?

Angel investors typically focus on early-stage rounds, though their involvement can vary depending on the size and goals of the startup.

Pre-seed funding

Pre-seed rounds are often the first fundraising stage, where founders seek capital to turn an idea into reality.

Angels are particularly valuable at this stage, as traditional venture capital sources are less likely to invest in unproven ideas. Pre-seed investments by angel investors usually range from €10K to €500K.

Seed funding

Seed funding is where many angels are most active. By this stage, a startup usually has an MVP (Minimum Viable Product) or some early market traction. Angel investors are drawn to the early signs of product-market fit and growth potential.

Bridge rounds

Bridge rounds are short-term rounds aimed at helping a startup extend its runway or reach key milestones. Angel investors often step in at this point, providing lower-risk funding to companies with some traction before larger institutional rounds.

Follow-on rounds

Many angel investors participate in follow-on investments during subsequent rounds to avoid dilution or because they believe in the company's long-term potential. Super angels or institutionalized angels are more likely to participate in these rounds, as they require larger capital contributions.

Angel investors & syndicate platforms

Early-stage startups often require more capital than a single angel investor can provide. Syndicate investments allow multiple investors to pool their resources, collectively meeting a startup’s funding needs.

How do syndicate investments work?

Syndicate platforms allow individual angel investors to pool their resources and invest collectively in startup opportunities while helping startups manage this group of investors more efficiently, particularly after funding.

The platform typically provides an investment vehicle—often a nominee structure—which simplifies the startup's ownership records by consolidating multiple investors into a single, legally recognized entry into their cap table, facilitating governance and future funding rounds.

Syndicate investments simplify fundraising by allowing startups to pitch to a group of investors at once rather than negotiate individually. These deals are often led by seasoned angels who manage communication, negotiations, and due diligence on behalf of the group. The syndication platform simplifies all parties' administrative tasks, KYC, and other compliance obligations.

>> Raise a syndicate round with SeedBlink’s Raise Hub.

How to find angel investors for your early-stage round?

Your professional network

You are closer to angel investors than you think! Tap into your LinkedIn connections or reach out to former colleagues, mentors, or industry peers who might introduce you to angel investors.

Events and conferences

Attend sector-specific conferences or pitch events where angel investors often look for new opportunities. Many cities and online platforms host regular events tailored to startups.

Check out the top startup conferences to attend in Europe.

Accelerators and startup programs

Accelerators and startup programs can be excellent launchpads for connecting with angel investors. Many accelerators have extensive networks of alumni and mentors who are active angel investors themselves.

Programs like Y Combinator, Techstars, and 500 Startups have strong track records of helping founders secure angel investments. Even if you don't secure funding directly through the program, the connections and credibility gained can be invaluable in your fundraising efforts.

Check out the top European accelerators and startup programs here.

Angel clubs and communities

There are many angel networks and online platforms specifically designed to connect startups with investors. These networks bring together groups of angel investors actively seeking new opportunities.

Here, you have a list of local and regional versions of European angel clubs and communities.

Check out the top European Angel investment platforms & clubs here.

How to pitch to angel investors

​​Your pitch deck is often the first interaction potential investors will have with your company, and it needs to tell a concise, engaging, and convincing story. Angels are looking for more than just a great idea—they want a clear vision, a strong business model, and a passionate team capable of executing that vision.

What do angel investors look for at pre-seed?

Before seeking pre-seed funding, founders should prepare by ensuring they have clear business fundamentals, a developed MVP or prototype, a strong core team, and basic financial projections.

You’ll also need a solid pitching toolkit with a compelling pitch deck, product demo, and early market validation from customers or research. Lastly, outline your post-funding goals and growth strategy.

For detailed support, SeedBlink’s Funding Sprint program can help startups build a strong foundation and secure the necessary funding for growth.

What do angel investors look for at seed level?

Before seeking seed funding, founders should have refined business fundamentals, a functional product beyond the MVP stage, and strong product-market fit indicators. Your team should be fully identified, with key hires and employee stock option plans in place.

The next step is to show product traction, including user data, growth metrics, and partnerships. Prepare detailed financial projections, a refined pitch toolkit, and market validation while also having a clear funding strategy and due diligence documentation ready.

Lastly, define post-funding goals and future fundraising plans.

Angel investors vs. VCs

Though both angel investors and venture capitalists provide capital to startups, their approaches differ. Here's a quick comparison:

Angel investors vc. Crowdfunding platforms.

Another option for raising early-stage capital is crowdfunding. Here’s how it compares to angel investing:

Raising funds from angel investors. Case study: FoodFix.

FoodFix, a UK-based startup, aims to innovate in food recipe-sharing, focusing on environmental impact. The company sought pre-seed funding from angel investors to support its early-stage growth.

Key points of FoodFix's fundraising round:

1. The startup used SeedBlink's syndicate service to facilitate their fundraising, using the nominee vehicle and infrastructure to aggregate angel investors.
2. The service offers flexibility for follow-on and secondaries within the syndicate, as well as facilitates governance and investor relations.

Mihai Gavan, CEO and Co-Founder of FoodFix, commented on the process:

"With SeedBlink's syndicate investment vehicle and infrastructure, we were able to bring together our preferred angel investors and close the round quickly and efficiently."

Read the full FoodFix case study here.

Stay connected!

To dive deeper into the fundraising process, explore SeedBlink's resources to learn more about angel investing, gain insights into raising capital, and find the right strategy for your startup's growth. Check out our Fundraising 101 guide and subscribe to our newsletter below!