How Business Angels Approach Project Selection

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Investments at the seed stage are high-risk. In addition, it is quite difficult to calculate the forecast of commercial success for a new enterprise. Due to these circumstances, all business angels thoroughly and carefully approach the selection of projects in which they will invest.

Both angel investors and investment seekers should learn the most important rules for choosing companies to fund. This will make it easier to find common ground with each other, as well as develop useful and profitable ideas.

Today, business angels reject eight to nine out of ten commercial proposals. This is due to the difficulties of predicting the success of startups, and investors do not want to lose their own investments.

Business angels begin choosing a company to invest in with analysis. Today, there is no standard for this procedure, so investors carry it out in accordance with individual canons. For some angels, a simple conversation at a personal meeting is enough.

Other investors prefer to review lithuania email list and evaluate all the documentation over a long period of time. Individual angels, interested in the idea, may take part in drawing up a business plan for their part. Each investor analyzes the project in their own way, based on their own experience and the specifics of the company's activities.


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In Western countries, the procedure for selecting and analyzing projects for investment is more standardized, since it has historically established norms. Work with proposals is divided into two phases: primary selection (deal flow) and evaluation (due diligence).

Search, initial selection of the project (deal flow).
This stage does not take much time. At this stage, the business angel reviews the proposals received or independently searches for innovative or commercial projects that are at the "seed" stage. The investor searches not only among the startups presented to him. He searches for companies suitable for investment through personal contacts and acquaintances in scientific and business communities, through Internet resources and the media.

In order for an angel to choose a startup, it must meet a number of mandatory criteria. These include profitability, competitiveness, ease of practical implementation of the idea, and the absence of legislative and tax problems.

Another key indicator influencing the investor's choice is the optimal ratio of the amount of projected final profit to the amount of financial investment and the level of risk. For business angels, a startup is considered financially profitable when the projected amount of returned invested funds exceeds the average in the industry.

At the initial selection stage, investors often make decisions based on their business sense and extensive business experience. Therefore, the task of investment seekers is to present the company in the best possible light, backing up the presentation with expert opinions, assessments, and quantitative indicators.