An angel investor is an individual putting their own money into an early business, usually earlier and in smaller amounts than a fund would. Because it is their money rather than someone else’s, the decision is more personal: they are backing you as much as the business, and they frequently want involvement rather than only a return.
That changes what matters in the approach.
They back the person as much as the business
At the stage angels invest, there is rarely enough evidence to assess the business objectively. What they are judging is whether you will execute, tell them the truth when things go badly, and be workable to deal with.
That is why warm introductions matter far more than cold approaches here. Someone vouching for you substitutes for a track record you do not yet have.
Many want involvement, not just a return
Angels are frequently former operators who want to be useful, and that experience can be worth more than the money. It also means a bad fit is genuinely difficult, because you will be dealing with them regularly.
Ask what involvement they expect before taking the money, and speak to founders they have already backed. A investor who resists that is telling you something.
Be clear about what you are selling
Equity is permanent: you are selling a share of everything the business ever earns, plus rights over decisions. Agree upfront what the money buys, what the valuation is based on, and what happens in later rounds.
Some angels invest through convertible instruments rather than shares initially, which defers the valuation question. Understand which you are agreeing to and what it converts into.
What to have ready
A specific amount tied to what it buys, evidence that people buy, honest numbers including the downside, and a compliant entity: registration with current annual returns at the Companies and Intellectual Property Commission, a clean securities register and tax compliance.
Be aware that anyone providing financial advice or promoting investments must be authorised, which you can verify with the Financial Sector Conduct Authority. Angel investment also suits very few businesses; development finance and customer prepayment leave you owning the company.
Frequently asked questions
What is an angel investor?
An individual investing their own money, usually earlier and in smaller amounts than a fund, often wanting involvement as well as a return.
What do they actually assess?
You, largely. At that stage there is rarely enough evidence to judge the business, so execution and honesty matter most.
How do I reach one?
Warm introductions. Someone vouching for you substitutes for a track record you do not yet have.
What should I ask before accepting?
What involvement they expect, and speak to founders they have already backed. Resistance to that is a warning.
Is angel investment right for most businesses?
No. Equity is permanent and suits few businesses. Development finance and customer prepayment leave you owning the company.
Originally published in February 2018. Updated September 2026 into guidance on what angel investors look for.
