In the world of investing and private equity, angel investors play a crucial role in providing early-stage capital to promising startups. One of the key factors that determine an angel investor's success is their ability to identify and secure high-potential investment opportunities. However, when it comes to deal sourcing, angel investors often face many challenges in establishing reliable and efficient deal-sourcing networks. In this post, we will explore the complexities that angel investors encounter in their quest for lucrative investment opportunities and suggest our solution to solve this issue.
The current situation in the capital market for angel investors depends on various factors that block multiple processes and capital flow. Some countries have limited deal flow, weak institutions, and limited investor protection. In 2018-2019 a total of 345 000 angel investors were active. This number dropped in 2020 due to the pandemic, but the volume of seed and angel venture capital deals increased significantly over the past two years.
To confirm it, as per Statista, in the first quarter of 2022, seed and angel deals reached a value of 10.3 billion U.S. dollars, the highest value recorded throughout the consideration period.
Since there is no one-size-fits-all solution to setting up and operating an angel organization, a diversity of models and structures further increases problems for them.
These obstacles, particularly in emerging economies, are primarily based on unreliable deal source solutions. Due to the lack of self-promotion, it might be hard for angel groups to get on the radar of startup founders. Lack of resources and knowledge slows the due diligence, restraining angel investors from finding the relevant investment target.
Consequently, angel investors get confused and intimidated by the startup investment process, which often prevents them from investing. They have indeed financial resources and the willingness to support companies they believe have potential. Let’s dig into that further.
One of the primary challenges angel investors face in emerging economies is the need for more dependable deal source solutions. Unlike in developed markets, where well-established platforms facilitate connections between investors and startups, emerging economies often need such infrastructure.
This makes it difficult for angel investors to access a pipeline of quality investment opportunities. Without reliable deal flow, angel investors find it challenging to identify potential startups with promising growth prospects, hindering their ability to diversify their portfolios and achieve higher returns on investment.
Finding quality investment opportunities is a daunting task for angel investors. Unlike venture capital firms with dedicated teams of investment analysts and managers, angel investors often rely on their personal networks, referrals, and industry events to discover potential startups. This limited access to quality deals makes it challenging for angel investors to build a diversified portfolio and identify startups with high growth potential.
Additionally, we can add the inability to systematically cover industries and geographies (no analytics team) and costly scouting (traveling). Also, there is a lack of Exit opportunities. Angels should be ready for cross-border deals if there is a lack of VCs in a country. This leads them to the next obstacle.
In emerging economies, angel groups often struggle with a lack of visibility and recognition among startup founders. Unlike venture capital firms that actively promote themselves through marketing efforts, angel investors may not have the same level of exposure.
This need for more self-promotion makes it difficult for angel groups to get on the radar of ambitious entrepreneurs seeking funding. Consequently, promising startups might bypass potential angel investors, missing out on a valuable early-stage funding and guidance source.
To make angel investor’s life easier, providing a complex solution to all the problems stated previously, we have created TeQatlas - an intelligent SaaS platform designed to revolutionize investment activities through the power of artificial intelligence. By ensuring workflow automation, insights-driven market, quality deal flow, portfolio management, and real-time insights, TeQatlas empowers investors to streamline their deal flow processes and make informed decisions.
Moreover, TeQatlas grants angels and VCs broad functionality within the personal board, where all companies are stored and sorted by relevance score so investors can focus on the specific industry. These features increase the accuracy of the industry assignment and the granularity of data provided on the platform.
By specifying their preferences (e.g., geography, industry, ticket size, etc.), angel investors can adjust incoming deals specifically to their needs and request additional information on the active deals. This is a real solution, constantly providing highly relevant deals to invest in.
With TeQatlas, angel investors will access the network of other investors, venture capital funds, accelerators, and other key market players. This will allow them to increase their expertise and share knowledge and experiences.
Angel investors play an indispensable role in fostering innovation and economic growth. However, the challenges they face are unique and multifaceted. From unreliable deal source solutions and a lack of self-promotion to resource and knowledge constraints and complex operational structures, these obstacles can hamper the effectiveness of angel investors in identifying and nurturing promising startups.
TeQatlas offers a powerful tool to address these challenges and to build a robust and loyal network by adopting the latest technology capabilities with digitization as the engine of its end-to-end processes. This will require collaborative efforts between stakeholders, including government bodies, business associations, and experienced investors, to develop a more supportive ecosystem on a global scale.
Thus, Augmented Investment Intelligence (AII) will diversify and make the capital investment market accessible, disrupting an industry and increasing the respective markets exponentially.
