What angel investors look for in a startup

Most founders know they need to impress investors.

The harder question is how.

Is it the pitch deck?
The traction?
The team?
The market size?
The way the round is structured?

The honest answer is that angel investors rarely make decisions based on one thing. They are looking at the whole picture.

During a recent Funding Mastermind for the Focused For Business community of startups, we went inside the mind of an angel investor with three people actively investing in early-stage businesses.

The panel included Gillian Fleming, co-founder and managing director of Mint Ventures, a women-led syndicate investing across the UK in companies with diverse leadership teams and clear social, ethical or environmental purpose. Rosalynne Watt joined as an angel investor with HerMesa, where she focuses particularly on female-led and sustainability-focused businesses. James Jenkinson brought a different perspective as an angel investor with a background in engineering, manufacturing, SME boards and international growth, as well as his role on the Investment Screening Committee for the British Design Fund.

Together, they gave founders a useful reminder.

Every angel is different.

But some themes come up again and again.

Start with a clear problem

One of the first things Rosalynne looks for is whether the problem is easy to understand.

If an investor cannot quickly grasp the problem, they will struggle to believe in the opportunity.

That does not mean the business has to be simple.

But the explanation does.

Rosalynne explained that she hesitates when there is not a clear problem, when the market has not been tested, or when there is no plan mapped out. Investors know plans change, but they still want to see that the founder has a stake in the ground.

That is a useful lesson.

Founders often start by explaining the product.

Investors usually want to understand the problem first.

What is happening in the market?
Who is experiencing the pain?
Why does it matter now?
How do you know people care?

If those answers are missing, the rest of the pitch has to work much harder.

The founder matters as much as the business

James was clear that his first signal is often the founder.

Can the founder clearly explain what they are solving and why?

As he put it:

“If they can’t articulate it in front of us, then they can’t articulate it in front of a customer.”

That is sharp, but fair.

Investors are not only judging the idea. They are judging whether the founder can sell it, explain it, lead it and keep going when the startup journey gets difficult.

This does not mean founders need to be polished performers.

It means they need to be clear.

If you cannot explain the problem, the customer and the opportunity in plain language, investors may question whether customers will understand it either.

Angel investors look at the founding team

All three investors came back to the team.

Not just the skills on the team.

The way the team works together.

James talked about chemistry, durability and dynamism. Gillian also emphasised founder chemistry, clarity of roles and the risks that come when co-founders overlap too much or lack clear responsibilities.

Rosalynne added that the startup journey is tough, so investors want to see whether the founding team has the relationship strength to work through problems together.

That matters because investors know early-stage businesses change constantly.

The original plan will probably shift.
The product may evolve.
The route to market may change.
The first hires may not be the final hires.

So investors are asking:

Can this team adapt?
Can they listen?
Can they have honest conversations?
Can they bring in the skills they do not yet have?

Gillian made an important point here. Angels are not expecting founders to have every skill needed to take the company all the way. But they are looking for self-awareness.

Founders who pretend they can do everything create concern.

Founders who know where they are strong, and where they need to bring in support, feel more investable.

Passion helps, but it is not enough

Founders are often passionate.

That is good.

But passion alone does not close a round.

Gillian explained that Mint Ventures receives hundreds of applications. Before a founder gets in front of them, the materials need to explain the opportunity clearly enough on their own.

Founders often say:

“When I explain it to you, you’ll understand.”

But sometimes they will not get that chance.

The deck, summary or first message has to carry enough of the story to get through the first filter.

Gillian also warned against decks or calls that are too product-led or too sales-focused. If founders spend most of the time talking about the product or technology, they may lose the investor before they have explained the business case.

The lesson is simple.

Your first materials need to explain:

The problem
The market
The customer
The traction
The team
The scale opportunity
The exit route

Not just what the product does.

Honesty is a strength

One of James’s strongest points was about honesty.

He wants founders to be open about risk.

That does not mean listing every possible thing that could go wrong.

It means showing that you understand the main risks and have thought about how to manage them.

What are your key concerns?
Where is the business still vulnerable?
What could stop this working?
What are you doing about it?

Founders sometimes feel they need to look as if everything is handled.

But investors know that is not reality.

An early-stage business always has risk.

Being honest about that risk can build confidence because it shows judgement.

Pretending the risks do not exist usually does the opposite.

Do not forget the exit plan

Gillian made a point that many founders miss.

Pitch decks often cover the standard areas now, but the exit plan is still frequently weak or absent.

That matters because investors need to understand how they might get their money back.

You do not need to name the exact company that will buy you in six or seven years.

But you do need to show you have thought about:

Who might acquire this type of business?
Why would they buy it?
What kind of company would this become attractive to?
What value would they be buying?

This is especially important because angel investors are taking high risk at an early stage.

They need to believe there is a route to return.

Traction means early buying signs

Founders often ask what counts as traction.

The panel gave a useful answer.

Traction is not one thing.

It depends on the business, the stage and the market.

For James, in a B2B context, strong signs might include detailed letters of intent, customer commitments, evidence of future purchasing, or demand for exclusivity. A vague expression of interest is helpful, but a more specific commitment carries far more weight.

For example:

“We like the idea” is weak.

“We will buy 10,000 units in six months at this price, if performance criteria are met” is much stronger.

Rosalynne pointed to proof of concept, product demonstration, initial market feedback, small revenue, grants and other forms of external validation. She also noted that IP can be relevant where it creates value and defensibility.

Gillian described traction as “early buying signs”.

That could include:

Independent market research
Early customer conversations
Signed or near-signed partners
Changes in legislation
Key opinion leader support
Grant funding
Waitlists
Early revenue
Repeat customers

The important point is that traction should show something real is happening outside the founder’s head.

A waitlist is not enough on its own

Hatty, the panel faciliator and founder of Focused For Business, pushed the panel on waitlists, which led to one of the most useful parts of the conversation.

Waitlists can help.

But they are weak if they sit alone.

James explained that a waitlist has more value if there is some form of commitment attached, such as a reserve fee or another action that proves the person is serious.

Rosalynne suggested that early revenue may be stronger, but a letter of intent from a large organisation can be equally interesting depending on the business.

Gillian was very clear:

“But a waitlist on its own, it wouldn’t be something we would invest in.”

That does not mean founders should ignore waitlists.

It means they need to show how the waitlist connects to the rest of the commercial plan.

How will you convert the waitlist?
What percentage do you expect to pay?
What other channels are you building?
Are there partners or distributors involved?
Is there evidence that demand turns into revenue?

A big waitlist can look exciting.

But investors want to know what happens next.

Revenue is powerful, but it still needs context

When asked whether there was one magic metric that would make an angel sit up, the answer was no.

There is rarely one metric that does everything.

Rosalynne said early-stage revenue is impressive, especially when combined with a strong team, mission and vision.

Gillian added that investors are not usually homing in on one metric in isolation. Even something that sounds attractive, such as zero customer acquisition cost, may not stand out unless the surrounding story makes sense.

Investors want to understand:

Are customers returning?
How much are you spending on marketing?
How does that relate to sales?
What is the go-to-market strategy?
Is the business moving from interest to action?
Can this be repeated?

A single number can help.

But the story around the number matters more.

SEIS and EIS matter for angel investors

The panel also explored deal structure, and this is where founders need to be especially practical.

Gillian explained that if you are applying to an angel group, SEIS and EIS are important because the tax breaks help reduce risk for individual investors. Angel groups may operate under a shared umbrella, but the money still belongs to individual people.

That means risk matters.

For many angel investors, SEIS or EIS can make a material difference to whether they are willing to invest.

James agreed that SEIS and EIS are very important, while noting that exceptional opportunities can still happen without them. But for most founders approaching angels, having this sorted should be a priority.

The simple lesson is this:

If you are raising from angels, do not treat SEIS or EIS as an admin detail.

Treat it as part of making the opportunity investable.

Be careful with ASAs and rolling rounds

Gillian gave very practical advice on Advanced Subscription Agreements, or ASAs.

From a founder’s point of view, ASAs can feel useful because they allow money to come in before a full round closes.

From an investor’s point of view, they can feel risky.

Gillian described an ASA as “a blind bet”.

That is because investors have fewer protections than they would in a fully negotiated angel round.

James put it simply:

“Angel investors will often avoid them.”

He added that ASAs are founder-friendly, not investor-friendly.

That does not mean they never happen. They do.

But founders need to understand how angels may see them.

Angel groups often prefer a fully closed, negotiated round with proper protections, clear documentation, SEIS/EIS clauses and a defined backstop position.

If you are using an ASA, be ready to explain:

Who is leading it?
What protections are in place?
When will the full round close?
Who else is already committed?
How will the money be used?
How are investor risks being managed?

Momentum helps

James made a wonderfully honest point about angel psychology:

“Fundamentally, we’re all sheep.”

What he meant is that investors are influenced by momentum.

If credible people are already looking at or backing a deal, that attracts attention.

This is not because angels are lazy.

It is because early-stage investing is risky, and investors often rely on other people’s scrutiny, sector knowledge and judgement to help them assess an opportunity.

That means founders should think carefully about how they create momentum.

Warm introductions help.
A credible lead investor helps.
Relevant angels help.
Sector experts help.
A properly structured round helps.

The first investor can be the hardest.

But once the right person leans in, others may follow more easily.

If angels are not biting, listen to the signal

One founder asked how long they should keep going if they are actively approaching angels but not getting interest.

James advised going hard in short bursts, as fundraising can be enormously time-consuming. Assuming that you have done your homework and are approaching the right investors (and enough of them), if there is no bite after six months, that tells you something. His advice was to go back to the drawing board, bootstrap, and build more value in the business.

Rosalynne agreed, but added an important nuance.

A “no” now may not be a “no” forever.

Relationships built in year one may come to fruition in year two or three. The investor may simply need to see more progress.

Gillian advised founders to go back to the angel groups they have approached and ask for more detailed feedback.

Is the business too early?
Is it missing traction?
Is the sector wrong for them?
Is the round structure off-putting?
Is there another finance route that would fit better for now?

This matters because fundraising takes huge amounts of time.

If the business is not yet ready for angel investment, founders may be better off building revenue, using grants, taking startup loans or improving traction before trying again.

The real lesson: angels invest in a connected story

By the end of the panel, one thing was clear.

Angel investors are not looking for one magic metric.

They are looking for a connected story.

A clear problem.
A credible founder.
A team that can survive the journey.
Evidence that customers care.
A plan to move from early interest to revenue.
A round structure that reduces unnecessary risk.
A believable path to investor return.

That is what makes investors lean in.

Not perfection.

Not one impressive number.

Not a big deck full of claims.

A business that feels thought through, commercially grounded and led by founders who can learn, adapt and execute.

Final thought

Fundraising can feel mysterious from the outside.

But angel investors are not looking for magic.

They are looking for evidence.

Evidence that the problem matters.
Evidence that customers care.
Evidence that the team can deliver.
Evidence that the deal makes sense.
Evidence that there is a route to return.

As Hatty summarised during the discussion, it is not one thing that wins through. It is the way the team, the story, the traction and the plan all hang together.

That is what founders need to build.

And that is what they need to communicate.

Want to understand what investors are really looking for?

If you are preparing to raise investment and want to understand how to build a stronger fundraising strategy, take a look at Focused For Business’ 90 Day To Equity Investment programme.

The programme is designed to help founders get clearer on their investment story, improve their funding readiness and to ensure they are confidently approaching the right investors.

Watch the 90 Days to Equity Investment programme video here: https://www.youtube.com/watch?v=n1n9NqmLrYA&t=2s

FAQs – Angel Investors