Angel Guide
If company-building is like climbing a mountain, the angel investor is a founder’s sherpa, equipping them with the right tools and serving as their emotional support for the journey ahead. Angels are instrumental in a company’s success. You might be a founder, operator, or thought leader — no matter your expertise, if you can contribute a valuable perspective or unlock a new network, founders will want you on the cap table.
Check
The following is a list summarising due diligence actions we recommend all angel investors do prior to investing in a company. The list is a guideline of recommended actions; feel free to do as few or as many as you wish. VC firms are regulated entities that are required to undertake detailed Know your Customer (KYC) checks to comply with Anti-Money Laundering (AML) regulations. If investing alongside them, founders will likely have already provided much of this information to investors. That said, it is recommended you still do your own lightweight due diligence checks. Increasingly, founders close investment rounds without meeting their investors in person, so it is encouraged you know in whom you are investing.
☑️ Understand the directors and shareholders of the company as well as the Ultimate Beneficial Owners (“UBO”) of those shares. You should at a minimum know everyone owning more than 20% of the issued share capital.
☑️ Check founders and key individuals on the latest government sanctions list.
☑️ Check the current cap table and the cap-table post investment including any option pools.
☑️ If investing in a UK company, UK Limited companies can be checked on Companies House here. All UK Ltd companies’ directors can be seen on this site. Ensure the legal name on your investment documents matches that found here.
☑️ Ask the founder whether the entity receiving the investment is the same as the entity which holds the IP of the business (If applicable).
☑️ Ask the founder whether there are any litigation proceedings or claims facing the company. Which, to the company's knowledge, is currently threatened in writing against the company or any officer, director, or key employee of the company? Ensure the company has no indebtedness for borrowed money nor has it guaranteed the indebtedness of any other person or entity.
☑️ Ask the founders whether they have any past criminal convictions.
☑️ Ask whether any of the founders are Politically Exposed Persons (PEPs).
Invest
Once you’ve built conviction in an investment and convinced the founder of your value-add to the business, you need to formalise your agreement to invest. Take a look at template financing instruments below and read through the explanatory notes for a more well-rounded understanding of the documents.
As an angel, you’ll typically invest with other angels in an angel round or alongside an institutional investor if you’re joining a company at the pre-seed stage and onwards. The most convenient and powerful funding rounds are those in which all investors are treated equally — help founders gain maximum alignment across the cap table by following the conditions of other investors in the round. Not doing so can slow down the closing process and may create legal confusion as the company matures.
Click on the below flags to access example angel documents by jurisdiction below:
Connect
Angel investing is unlike any other form of investing. Your network is your main avenue for discovering exciting opportunities. We know that building out your network can be difficult given how tightly wound the startup ecosystem is. Seedsummit is a place to connect with others and strengthen your network.
More coming soon…
