Raising early-stage funding can be one of the most difficult yet transformative steps in a startup’s journey. At a time when traction may be limited and institutional capital out of reach, angel investors are often the first to back a founding team’s vision. These individuals are a key source of external capital for UK startups. Learn more about how they operate.
Angel investors are private individuals who invest their own money into early-stage startups, typically in exchange for equity. They usually support businesses at the pre-seed or seed stage, when risks are high and data is limited, but the potential upside is significant.
For many founders, angels represent the first source of external capital after raising money from friends and family. These investors provide more than just cash. They bring perspective, speed and a willingness to back founders based on belief in the team or concept rather than exhaustive metrics or forecasts.
Because they are using personal capital and often act independently, angels can make decisions quickly and with a level of flexibility not typically found in institutional funds. This makes them a crucial early partner for founders navigating the first stages of product development, customer acquisition or market validation.
Angel Investors are typically high-net-worth individuals who have either built and sold businesses themselves or accumulated capital through executive careers. Many have experience in startups or scaling companies and see early-stage investing as a way to remain engaged in the entrepreneurial ecosystem.
A major motivation for UK-based angels is the availability of SEIS and EIS tax relief schemes. These incentives reduce the financial risk of backing startups and make investing in innovation more attractive. However, financial return is only one part of the picture.
Most angels also invest for personal reasons. They want to support the next generation of entrepreneurs, give back to the business community or participate in sectors they are passionate about. For many, founder fit matters just as much as market size or product strategy. Enthusiasm, storytelling and a credible team often sway an angel more than a polished model or pitch deck.
Some angels operate solo, while others prefer to work within a syndicate or network such as Sowing Capital. These groups allow angels to share due diligence, pool capital and collaborate on deal-making. For founders, this means angel investors can act individually or as part of a collective investment.
Angel investors are best suited to startups raising between £50,000 and £500,000. This range typically applies to pre-seed and seed rounds, but can also include early Series A rounds where the angel follows a larger lead investor.
Because angels are often willing to fund a business at a very early stage, they can be particularly helpful to founders who are not yet ready for venture capital. They are often the “first believers” who are willing to back a team and an idea before customer data or revenue traction is fully developed.
In terms of sequencing, many startups raise initial capital from angels before engaging with seed funds, venture capital or institutional brokers. This early capital is frequently used to build a product, validate market assumptions or make the early hires needed to grow the business further.
Angel investments are typically structured as equity deals, although convertible notes and Advanced Subscription Agreements (ASAs) are also common. In most cases, the Angel receives ordinary or preferred shares in exchange for their investment.
Ticket sizes vary, but most angel investors will contribute between £10,000 and £50,000 to a single round. Startups often raise from several Angels at once to close their target amount. This means founders may need to manage multiple relationships and coordinate documentation across investors.
SEIS and EIS eligibility can make a substantial difference to angels. Founders should ensure they understand these schemes and have advance assurance in place if possible. This can significantly increase the chances of securing capital.
While every investor is different, many angels expect regular updates on progress, access to company financials and occasional involvement in strategy. Some prefer to stay hands-off, while others offer mentoring or introductions. Clarity on expectations upfront is key to a healthy investor relationship.
Introductions can happen through personal contacts, investor networks or via a fundraising service. Some angels actively source deals themselves, but many rely on warm introductions or trusted platforms to discover opportunities.
The appeal of angel investors lies in their speed, flexibility and willingness to engage early. They can provide not only capital but also experience, credibility and a valuable network that helps founders build faster and more confidently. When aligned with a founder’s vision, angels can become long-term supporters, offering follow-on investment or help with future fundraising.
However, there are challenges to consider. Every Angel operates differently, and not all are familiar with startup best practices. Inconsistent expectations or informal arrangements can create tension down the line. Angels also have limited firepower. They may not be able to support future rounds beyond their initial investment.
Because rounds often include multiple angel investors, founders need to manage several relationships at once. This can be time-consuming and may require diplomacy and transparency to avoid miscommunication.
Founders often ask how to find angel investors and the honest answer is that there’s no single path. The most reliable route is through warm introductions via mutual contacts, former colleagues, early advisors or even other founders. Personal recommendations carry weight and increase the chances of engagement.
Another option is to go directly. Some founders try to find angel investors on platforms like LinkedIn or by attending investor events and pitch showcases. However, this approach can be time-consuming and unpredictable.
ThatRound curates active angel networks and investor syndicates in one place, giving founders structured access to multiple angels through a single pitch process. These groups are often backed by introducers who are actively reviewing deals, and can help reduce friction, speed up decision-making and improve alignment by sector and stage. Combined with ThatRound’s round management tools and service filtering, this offers a more efficient route to the right investors than cold outreach or unstructured events.
Finally, fundraising services, another type of partner available on ThatRound, also offer support. These services often have existing relationships with active angels and can help position your round appropriately, manage outreach and ensure legal structures are investor-ready.
