How to find an «angel» for your startup: types of investments

Anastasia Maslo
Oct 23, 2024
3 min read

investment, investor, investing, investors, investors, business angel, accelerator, accelerators, money, venture, venture capital, venture funds, venture investments

Starting a startup is like growing a tree: you need not only an idea-seed, but also fertile soil, sunlight and, of course, water. In the startup world, water is an investment. But «water» can be different: from life-giving moisture to a waterlogged puddle. So how can you choose the right «source» of funding and not ruin your project?

In this article, we will analyze the main types of startup investments and give advice on choosing an investor.

Main types of investments

Pre-seed: The very first investment to help test an idea and create a prototype

Sources: Personal savings, family, friends, grants, incubators.
Example: Google founders Sergey Brin and Larry Page received the first $100,000 from Sun Microsystems co-founder Andy Bechtolsheim.
Example in Spain: K Fund, Demium Startups, Lanzadera (Juan Roig accelerator, founder of Mercadona).
Tip from Spain: Pay attention to government startup support programs (ENISA) that offer grants and soft loans.

Seed: Investment at the initial stage, when the startup already has a prototype and first customers.

Sources: Business angels, accelerators, seed funds, crowdfunding.
Example: Dropbox has raised $1.2 million in seed investment from Y Combinator accelerator.
Examples in Spain: ESADE BAN (business angel network), Kibo Ventures, Crowdcube Spain.

Series A, B, C...: Subsequent rounds of investment that help a startup scale and enter new markets.

Sources: Venture capital funds, corporations, private investors.
Example: Facebook raised $12.7 million in Series A round from Accel Partners.
Examples in Spain: Seaya Ventures, Nauta Capital, Caixa Capital Risc.

IPO: Initial public offering of shares on the stock exchange.

Sources: Public Investors.
Example: Airbnb went IPO in 2020, raising $3.5 billion.
Exchange in Spain: Bolsa de Madrid (BME).
Examples in Spain: Solarpack, Lleida.net.

How to choose an investor

Reputation and experience: Examine the investor's portfolio, read reviews about the investor.

Example: Sequoia Capital is one of the most famous venture capital funds, having invested in Apple, Google, Airbnb.
Examples in Spain: All Iron Ventures has invested in Spanish startups such as Glovo, Jobandtalent, Paack.

Focus on your industry: An investor knowledgeable in your field will be able to provide valuable advice.

Example: If you are developing a medical app, look for an investor who specializes in MedTech investments.

Investment Terms: Pay attention to the size of the investment, the stake in the company the investor wants to get and other terms of the deal.

Example: Some investors may demand a seat on the board of directors or influence the company's development strategy.

«Chemistry» with the investor: It is important that you find common ground with and trust the investor.

Tips for attracting investment

Prepare a good presentation Talk about your idea, team, market and financial model.
Be confident: Investors invest not only in the idea, but also in the people.
Don't be afraid of rejection: Not all investors will say YES. Learn from mistakes and keep looking.

Tips for attracting investment in Spain

Prepare a quality presentation in Spanish: Clearly and concisely present your idea, business model, development plan.
Participate in startup events: South Summit, 4YFN, Barcelona Tech City - excellent venues for networking and finding investors.
Use government support programs: ENISA, ICEX - government organizations that help startups attract investments.