What are angel investors looking for?

So what are Angel investors looking for?  They are looking to make money. Pure and simple.

They do it by making highly speculative investments and hoping that a small number of them are successful. How successful?  Angel investors are typically looking for a 5-10x return on their money in 5 years.

While it varies from investor to investor, angel investors are interested in these characteristics:

  • Entrepreneurs and a management team with a history of successful startups
  • Product that can create or significantly change an industry
  • Compelling evidence that the product will sell, eg actual market sales, pilot tests, etc.
  • Intellectual property (eg patents) that can effectively protect the product’s underlying technology
  • Financial projections and an exit strategy that show a significant return to the investors