Oct 6, 2022
Angel Investing

Angel Investing Due Diligence: A Complete Guide

GoingVC Team

What is angel investing and what is due diligence?

Angel Investors are wealthy individuals that, through the benefits of being an accredited investors are allowed to invest in riskier assets, such as startups. Unlike Venture Capitalists, who raise money from additional investors into a fund and invest that capital into companies, angel investors invest their own money directly into companies. Like VCs, however, they also invest their time and resources into these companies with the ultimate goal of an exit event which allows them to earn a return on their investment. This is the life cycle of an angel investor - and it begins with creating a process to determine whether or not to invest in a company. This guide is about the processes Angel Investors perform to find such opportunities and make investment decisions.

Startups often need money in order to build a team, develop a product, and bring it to market. While some founding teams can fund these steps themselves, known as bootstrapping, many require raising capital from investors to achieve these goals. Enter Angel Investors. For companies seeking investment, raising capital from these institutional investors is often a daunting task, with the odds stacked against them when looking at the data, as shown in Figure 1 below. So Angel investors represent a path to fundraising at the early stages of development.

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