The 5 Biggest Myths About Angel Investors

In the entrepreneurial world, there’s a lot of talk about what to expect when you come across angel investors. Early on as an entrepreneur, the perceived image of these angel investors scared me shitless. 

People made angel investors look so big, powerful, and scary that I was terrified to approach them with business ideas. However, I ended up making a lot of friends in the entrepreneurial community who were angel investors.

From having extensive talks with them and almost taking money from angel investors, I learned quite a bit about them. In this article, I’m going to share the 5 biggest myths about angel investors:

1. They Have All The Power

Most people feel like they have no say or choice when it comes to angel investors. They feel that they must succumb to the every wish of the investor if they want money.

However, I learned from angel investors and other smart entrepreneurs that you have all the choices in the world. There is only one team that is doing what you are doing while there are millions of angel investors out there.

You don’t need to bow down to their every wish. You need to do what is best for your company. You can turn the tables on angel investors by trying to get them to bid for your startup. Just remember – great startups and teams have more leverage than they think they do.

2. Angel Investors Are Way Better Than VC’s 

This is probably the biggest myth of all that many entrepreneurs end up believing. Neither side is better, they’re just different from one another.

Angel investors look for different things and invest in startups at different stages whereas venture capitalists are interested in other things. It’s very hard for early-stage startups to raise money from VC’s where as it’s much easier to do so with angel investors.

Regardless of where your startup is, do not believe the myth that one type of investor is better than the other. They both are equally valuable, but it really depends on what your needs are and where your startup is at.

3. I’m Going With The Highest Valuation

Different investors will put different valuations on your business. However, a big mistake entrepreneurs make is to go with the higher valuation because they feel like they are getting a better deal.

In reality, many investors will give your business a higher valuation so that they can take a higher equity percentage out of your company. You may think your company is worth $1 million in their eyes, but they are only doing that to pump in a little extra cash to take more equity.

Always take investor valuations with a grain of salt. Don’t look at individual numbers, but the whole picture so that you can make the best decisions for your business.

4. If I Don’t Get Funded, I’m Screwed

Not really. Some of the biggest startups bootstrapped and became successful. Just because an investor doesn’t see your vision doesn’t mean it’s time to pack your bags.

If you have sight of what you want to achieve and you believe in yourself, a couple investors saying NO shouldn’t stop you. Investors are picky with their money and often make decisions based on their personal interests so don’t let a couple NO’s stop you from achieving your goals.

5. One Mistake And I’m Not Getting Funded

When you’re pitching to investors, you want to give the best performance possible. However, a couple mistakes or slip-ups don’t necessarily mean you won’t get funded.

Remember, most angel investors are or used to be entrepreneurs and know what it feels like to be on the other side. They aren’t as worried about your mistakes (as long as you can bounce back and learn from them) as they are about how driven you are for success.

Conclusion

Pitching to angel investors and building relationships with them can be a nervous, but exciting time for many entrepreneurs. This article shed light on 5 common myths many entrepreneurs believe about angel investors.