Angel investors can play a critical role in taking early-stage startups to the next level by providing strategic feedback, networking and guidance.  

Learn more about angel investors for startups, including how to find the right angel investors for your business.

Types of angel investors

Early-stage startups should aim to attract a combination of two types of angel investors:

1. Generalists are typically individuals who invest across a wide variety of industries in the startup industry. They are often former founders who’ve had successful outcomes. Now they are reinvesting in the startup ecosystem. “Having been in the founder’s shoes, generalists have a bunch of experience they could draw on to help early-stage companies navigate pitfalls,” said Malte Witt, Vice President in Startup Banking at J.P. Morgan.
2. Specialists have significant subsector expertise. For example, an angel investor in space tech may have spent their career at major companies in aerospace and defense. “Look at getting an angel investor who has unique expertise that offers specific value to your company,” Witt said.

Beyond individual investors, there are also angel groups that pool resources to provide larger investments, often through a special purpose vehicle (SPV). This shared investment structure consolidates multiple investors into a single entity, so SPVs can streamline cap table management and communication. These angel groups typically target specific industries, geographies or affinities, such as university alumni or sector expertise.

How angel investors can help startups

Beyond providing capital for startups, angel investors offer many benefits and can help:

• Introduce potential customers and investors through their network 
• Help with hiring and give input on strategy
• Refine pitch decks for institutional investors

Angel investors can provide a great sounding board for early-stage businesses. “There are infinite mistakes a founder can make, and the best thing startups can do is surround themselves with networks—including investors, advisors, law firms, financial institutions and peers—that understand common pitfalls,” Witt said. 

“Angel investors can be great resources for navigating the startup landscape,” Witt said. “Many angel investors aren’t looking just to make money. Oftentimes, they're looking to give back to a community that supported them.”

What to look for in an angel investor

The best angel investors for startups to consider are experienced ones, Witt said. 

“I would guide founders toward what I call ‘professional’ angel investors,” he said. Typically, these individuals or groups make three to four angel investments per year with typical check sizes ranging from $10,000 to $50,000. As a result, they understand the startup landscape and dynamics at play. 

Angel investors thoroughly assess startups before making investments. Likewise, startups should perform due diligence on angel investors before agreeing to work together. 

Due diligence should include:

• Research: Founders should look for public information on the angel investor’s track record, including previous investments and their outcomes. Other key public information includes the investor's reputation in the startup community, areas of expertise and preferred level of involvement. 
• References: “It’s not uncommon for a founder to ask to speak with an investor or another one of the angel investor’s portfolio companies to do a little bit of diligence,” Witt said. “‘How helpful were they when things were going really well in the business? How were they when things were not going well in the business?’” 
• Accreditation: Make sure the angel investor is accredited. To qualify, individuals must meet certain professional criteria and earn more than $200,000 annually or have a net worth above $1 million, excluding their primary residence.