How to get an Angel Investor Without Offering Future Equity

[Jasz]

There are a number of ways that founders can get angel funding without having to give up a portion of their company in return. For example, you can try to create an arrangement where the investor loans you money without taking any ownership of your company. Most investors won't be interested in this type of arrangement as they'd be sacrificing the potential of future equity and profits, but you may be able to find investors who are willing to take a chance on you.

Another option is to get funding from "angel groups" rather than individual investors. Angel groups—which are typically made up of various angel investors who pool their resources together—often have varying rules for how much involvement they expect in return for their investment. Check out the local angel investor scene in your area and see if any groups are willing to work with you without taking equity.

Find an angel you already have a relationship with. This is kind of a no-brainer, but if you already have a working relationship with an angel investor, then the chances of getting money from him or her are higher than if you're just reaching out cold.

 

[Yusra3]

Securing angel investment without surrendering any company equity is extremely challenging since ownership shares allowing substantial future financial returns are the primary incentive angels receive for placing high-risk bets on early-stage startups. Options without equity include convincing an angel to provide the funds as a loan with set repayment terms including interest, or potentially structured as convertible debt which becomes equity if not repaid by an agreed future trigger date. Success likely requires demonstrating an exceptionally innovative, nearly de-risked venture with clear mass popularity and revenue generation.