Angel investment: How to find investors for your business

Published Wednesday 5 November 2025

Table of contents

• What is angel investment
• Who are angel investors?
• How angel investment works
• Benefits of angel funding
• Disadvantages of angel funding
• What angel investors look for
• How to find angel investors
• Choosing the right angel
• Making the deal
• Getting the most from angel investment
• FAQs on angel investment

Key takeaways

• Prepare a compelling pitch that explains your business plan, costs, and revenue projections in under a minute, and know your specific funding needs for the next three, six, and 12 months before approaching investors.

• Target angel investors who have experience and knowledge in your specific industry sector, as they can provide valuable expertise and connections beyond just funding.

• Understand that angel investment requires giving up 10-25% equity ownership in exchange for capital, which means sharing control and accepting ongoing performance expectations from investors.

• Leverage angel investor networks like the National Angel Capital Organization (NACO) and attend industry events to connect with potential investors who align with your business goals and market focus.

What is angel investment?

Angel investment is a type of funding where a wealthy individual, known as an angel investor, invests their own money into an early-stage business. Unlike a bank loan, this isn't a debt you have to repay. Instead, the investor receives a share of ownership in your company, known as equity. This means they are betting on your future success.

Angel investors use their own money and make decisions quickly. They often move faster than banks or venture capital firms. Government programs like the Venture Capital Catalyst Initiative help increase funding for new businesses. This can give your business the financial head start it needs to grow.

Who are angel investors?

Angel investors are wealthy professionals or serial entrepreneurs who fund startups in exchange for equity ownership.

Who they are:

• High-net-worth individuals with business experience
• Often successful entrepreneurs who've built and sold companies
• Located globally, not just in major tech hubs like Silicon Valley

What they look for:

• Market knowledge: They invest in sectors they understand
• Strong teams: The people behind the business matter as much as the idea
• High growth potential: They expect significant returns on their investment

How angel investment works

The angel investment process generally follows a few key steps. It starts with finding the right investor for your business and making a connection. From there, you'll need to present your business plan and vision in a compelling pitch.

If an investor is interested, they'll perform 'due diligence' – a process of verifying your business's financials, market position, and growth potential. This is followed by a negotiation to agree on the terms of the investment, including how much equity they'll receive. Once you reach an agreement and sign the legal documents, the funds are transferred to your business.

Benefits of angel funding

Angel funding offers several advantages over traditional business financing:

• Speed of approval: Angel investors move quickly through approval and due diligence without institutional red tape
• Industry expertise: They provide valuable advice and connections within your market sector
• Personal involvement: They have a vested interest in your success because it's their own money at stake
• Immediate cash access: Funding often comes as a lump sum rather than drawn out over time
• Operational independence: Most angels want equity, not board control or management oversight

Disadvantages of angel funding

Angel investment means sharing ownership. You also take on new responsibilities. Here are some things to keep in mind:

• Share ownership: You give up part of your business in exchange for funding. Some government programs, like the Canadian Entrepreneurs' Incentive, can help reduce tax on eligible capital gains.
• Less control: While angel investors are often less involved than venture capitalists, they may still influence major decisions.
• Meet targets: Investors expect returns, so you need to track and report your business performance regularly

What angel investors look for

Angel investors look for more than just a good idea. They invest in businesses they believe have high growth potential. Here are a few things they typically look for:

• A strong management team: They often say they invest in people, not just ideas. A passionate and skilled team gives them confidence.
• A scalable business model: They want to see a clear path for how your business can grow significantly without a huge increase in costs.
• Market opportunity: A large and growing target market is attractive, as it provides more room for success.
• A clear exit strategy: Investors want to know how they will eventually get a return on their investment. This is usually through an acquisition or an initial public offering (IPO).

How to find angel investors

Finding the right angel investor can feel like a challenge, but there are several places you can look. A great starting point is connecting with your local business community and professional network.

• Angel investor networks: Organizations like Angel Investors Ontario or the National Angel Capital Organization (NACO) connect entrepreneurs with investors across Canada, and regional groups often receive support, such as a Government of Canada investment of over $1.26 million to help Northern Ontario Angels offer services like coaching and matchmaking.
• Professional advisors: Your accountant or lawyer may have connections to investors who are active in your industry.
• Industry events: Networking at conferences and trade shows in your sector can put you in the same room as potential investors.
• Personal network: Let friends, family, and mentors know you're seeking funding. You never know who might have a valuable connection.

Choosing the right angel

If you run a retail business, do not approach an angel investor who specializes in engineering. Find someone who knows your market and understands your business.

An investment deal works both ways. Make sure you are comfortable with any angel investor you contact:

• check their references
• confirm they are not investing in your competitors
• assess if you can work well together
• review their previous investments
• check if their level of involvement matches your needs
• see if they support businesses long term
• ask if they have useful contacts for partners and future investors

Making the deal

Follow these steps to secure angel investment:

Preparation phase

• practise your pitch so you can explain your business plan, costs, and revenue in under a minute
• know your numbers and be specific about funding needs for the next three, six, and 12 months
• answer questions about every assumption during due diligence

Negotiation phase

• address potential problems early, as they will come up during due diligence
• negotiate all terms, including ownership percentage, board seats, and intellectual property protection
• get legal and financial advice on funding contracts, such as stock purchase, loans, or convertible notes

Final phase

• review the complete deal with professional advisors
• trust your instincts and investigate anything that feels wrong before signing

Getting the most from angel investment

Angel investment suits businesses that want to exchange equity for capital and expertise.

Is angel investment right for you?

• Not suitable if: You want to retain 100% ownership of your business
• Good fit if: You need fast funding with industry expertise and mentorship

Key advantages over alternatives

• Simpler than venture capital: Less institutional complexity and faster decisions
• More flexible than bank loans: No collateral requirements or rigid repayment schedules

Before you commit

• Get legal and financial advice on all deal terms
• Ensure you understand the long-term implications of equity sharing

Maximizing your angel partnership

Most angel investors support the businesses they invest in. Your success helps them succeed, so you gain both funding and an experienced mentor.

Keep your business ready for investors with clear financial reporting and real-time insights. Start a free trial of Xero to manage your books with confidence.

FAQs on angel investment

Find answers to common questions about angel investment below.

What is an angel investor in Canada?

In Canada, an angel investor is a wealthy person who invests in new businesses. They use their own money and often have experience in your industry. They may also offer advice and support.

How much equity do angel investors typically want?

Angel investors usually want between 10 and 25 per cent of your business. Some government programs require you to own at least 10 per cent to get tax benefits. The amount depends on your business value, how much money you need, and the investor's involvement.

How long does the angel investment process take?

The process can take a few weeks to several months. It depends on how quickly you find an investor, how detailed their checks are, and how complex the legal work is. Having a clear business plan and organized finances helps speed things up.

Can I get angel investment for any type of business?

Many types of businesses can get angel funding. Investors prefer businesses that can grow quickly, like those in technology or life sciences. They want to see how your business can grow and give them a return.