For the purposes of this article when I talk about investors I am talking very specifically about Angel Investors. The type of person who has their own money, and is considering investing it into a start-up.

Venture Capital works in a very different way in that it tends to take that form of a single large fund comprised of several people’s, or organisation’s money. It may be managed by a single person, but the person making the decisions is not the person who has provided the initial pot of money. The figures tend to be significantly bigger as well.

We’ll look at this difference in more detail in a future article. It’s quite interesting how this distinction can have such a massive effect on what success looks like for the investor.

Anyway, I digress…

So an Angel investor has got some money. Probably not a vast Bill Gates like fortune, but certainly enough that they aren’t worried about paying the bills and so their decisions are not usually driven by a deep seated need to make money. They already have money. But they’re certainly open to the idea of having more. So if they aren’t in it for the money then what are they in it for?

In reality the reasons people invest are as varied as the people themselves, but in my experience over the last decade or so you can roughly clump them together into different categories of similar driving forces.

The first, and arguably the most common is that the sort of person who is willing to invest their money into something wants to do some good. Perhaps they made their money through their own company and were helped themselves in the past. They want to pay it forward and help someone else achieve the success they have had. Perhaps they have achieved all the goals they originally had - the nice house, the holiday home, paying the kids through school, university, and helping them get started in the world and they are left wanting to do some good somewhere.

It’s perfectly feasible that an angel is simply looking to be part of something they can be proud of. Maybe that’s cleaning plastic from the oceans, maybe it is reducing the effect of climate change, maybe it is providing clean water for people around the world who don’t have it. Philanthropy is very real, and the desire to do something impactful is often what causes an angel to decide to invest their own money.

The second possibility is very similar, but tends to come from a different starting point. The end goal is the same, the angel is looking to do something positive in the world. But the reason is a little darker. That is guilt.

Many people get rich doing things they’re not terribly proud of. In some cases that might be through businesses which are exploitative. Plenty of people have inherited money, and some of that may have come from exploitation of cheap labour or things that are environmentally damaging. Anyway the point is that a little “scrubbing of the soul” is a possible reason for someone to be looking for good businesses to invest in.

The third reason is simply that over the years the investor may have developed their own personal mission in life. Perhaps they come from a farming family and have seen the damage the widespread destruction of bee colonies has done? Perhaps they love to sail and know only too well the damage that has been done to our oceans? Perhaps a beloved family member suffered from a specific type of disease or a traumatic accident. You should never underestimate how much a person can be driven to do by a genuine mission. If a company matches their personal crusade then they are already halfway there.

It may simply be that the investor comes from a background that is traditionally less well supported and wants to change that. Whether that is female founders, Black or Asian founders, or even people with neurodivergent characteristics like dyslexia or ADHD. For this type of investor the business you are running may not be as important as the person you are.

The last category of investor is surprisingly common, and it is the person driven by boredom. Creating a business, scaling it up, running it, and making it a success can take a huge amount of your life (You aren’t kidding - Ed) and while the dream of selling up and retiring early with a small fortune is extremely attractive, the reality is that the sort of person who is willing to do the former, is rarely content to then do the latter for very long. So a new business that they can get as involved as they want to in, that provokes their interest, can be a lot more appealing than the idea of making a little bit more money.

None of this is to say that investors aren’t interested in money, clearly they are. But they don’t view it in the same way as those people who don’t much themselves. It is a way of keeping count, and for the more competitive, of keeping score. They are looking to invest smaller amounts, and they may well not be looking at being involved for the long haul.

But what we can honestly say is that a business that fits their personal criteria, or a founder that matches their demographic of choice, is much more likely to get the attention of an angel investor than a well crafted financial plan.

Obviously you’re gonna need one of those too, but that’s for a different day. The lesson to take away from this, is that a business that is looking to do good in the world is much more attractive to investors than one that simply sets out to make money. Simon Sinek would be proud.

Why might someone become an investor?