The short answer. Before investing, a business angel looks mainly at five things: whether the team can deliver, whether the market has responded, whether the numbers back up the story, what could go wrong, and whether the deal fits what they're looking for. They invest their own money, decide with little time, and walk away as soon as something doesn't add up.
What you'll learn
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How a business angel decides, and how that differs from a fund.
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How much angels actually invest, with Spanish data from AEBAN and IESE.
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The five things they look at, with the signals they want and the red flags that make them pass.
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What they ask for in return, and how the process runs from first meeting to signing.
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Where to find angels who fit your startup.
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A checklist for your next meeting.
If you're preparing your first round, this guide is one piece of a bigger process (How to prepare a pre-seed or seed round). Here we sit on the other side of the table.
What is a business angel, and how are they different from a fund?
Definition A business angel is someone who invests their own money in startups, usually in the earliest rounds, and often brings experience and contacts as well.
The money being theirs changes everything. They don't answer to a committee or to outside investors, and their personal judgment carries far more weight than it would in a fund.
| Item | Business angel | Angel network | Pre-seed or seed fund |
|---|---|---|---|
| Money | Their own | Their own, often co-investing | Other people's |
| How they decide | Quickly, with a lot of gut feel | Through a committee or a lead per deal | Through a formal process and committees |
| What weighs most | The people, and their own judgment | Fit with the network and the lead | The fund's thesis and scale |
| What they'll ask you for | The essentials, and trust | A format the committee can compare | More proof and more paperwork |
What I've seen In almost 30 years I've sat at many of those tables, including working alongside investors deciding where to put their money. What follows is what I've seen them actually look at, not what the textbooks say.
How much does a business angel invest?
Less than many founders imagine, and very unevenly. The Business Angels 2025 report by AEBAN and IESE, based on a survey of Spanish business angels, gives these figures for 2024:
How much a business angel invested in 2024 (Spain)
How to read it. The average is heavily skewed by a handful of big investors. The median, €20,000 a year, is a much better picture of the typical angel: half of them invested that much or less over the whole year, often spread across several startups. That's why angel rounds usually bring several investors together. According to the same report, only 14% of respondents didn't co-invest with others in 2024.
Tip If you need €300,000, you probably won't find it in one person. Plan your round around one investor who leads and several who follow. (How much to raise in your round)
What does a business angel look at first?
Not your financial model. They look at the headline of what you're presenting: what you do, who for, and why you. If they don't get that in the first few minutes, they never reach the rest. According to DocSend, in 2023 the average time investors spent on a seed pitch deck dropped below two minutes for the first time.
The five things a business angel looks at
- Can they deliver?
- Is anyone responding?
- Do they back the story?
- What could go wrong?
- Is it for me?
If you've read the 10 signs, these five questions are the same review seen from the other side of the table. (Is your startup ready to raise?)
"In the first few minutes they aren't looking at your effort. They're looking for what's missing, what doesn't add up and what isn't backed up."
What does a business angel look for in a team?
At the early stage, it's almost always what weighs most. An angel wants to know whether the founders know their industry inside out, whether someone builds the product and someone can sell it, and whether everyone is genuinely in. They also want it to be clear who brings what and who makes the calls.
| What convinces them | What makes them hesitate |
|---|---|
| Real experience in the sector or the type of business | "We're a passionate team" with nothing behind it |
| Someone who builds and someone who sells | Nobody who can sell |
| Full-time founders | A key founder who's only half in |
| A clear, sensible equity split | A partner with lots of equity and little commitment |
| Clear answers on who decides | Co-founders contradicting each other in the meeting |
They also pay close attention to who's pitching. Inspiring confidence is part of a founder's job: I've seen projects with real potential where, among other problems, the person defending them couldn't connect with investors. (Jordi Gil's stories)
How does an angel check that the market has responded?
The investor wants to see that the market has responded, not that the idea is good. This isn't a detail: in CB Insights' March 2026 analysis of venture-backed startups that shut down since 2023, 43% cited a lack of product-market fit.
So they look for:
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Proof the problem exists: paying customers, pilots, repeat usage, waitlists, letters of intent.
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A market you can actually reach: not just whether it's big, but whether you can get to it, and at what cost.
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Why now: what has changed so this works today and didn't five years ago.
Common mistake Presenting the size of the global market as if it were your market. The investor wants to know which part you can reach, through which channel and how fast.
Which numbers does a business angel look at?
This is where many rounds are won and lost. An angel doesn't need huge numbers at the early stage, but they do need consistent ones:
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Revenue and how it's evolving: the trend over several months matters more than last month.
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Customers: how many, how much they pay, what it costs to win them and whether they come back.
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Cash and burn: how many months you have left at the current pace. (Runway and burn rate)
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Consistency: if you say you're growing, your numbers show it; if you say you have a year of cash, your burn confirms it.
When a number is only stated, with nothing behind it, the investor discounts it. When two numbers don't match each other, they start to doubt all of them.
What risks do angel investors consider?
A good angel thinks about the bad scenario before the good one:
| Risk | What they ask | How to answer |
|---|---|---|
| Dependence | What if your biggest customer leaves or your channel fails? | With your plan B and what it costs |
| Cash | What if the next round is late? | With your runway and the levers you can pull |
| Competition | Why would you win? | With what sets you apart, and the proof |
| Regulation | Could the rules in your sector change? | With what you know and how you're protected |
| Team | What if a founder leaves? | With the shareholders' agreement and vesting |
What I've seen I learned this one firsthand. I launched Healthiers, a medical second-opinion service. When we designed it, advertising on the big platforms was part of the plan, and allowed. A few months after launch, those platforms changed their policies for the whole health sector, and the channel the plan relied on was gone. We decided to shut it down before we burned more cash. Since then, relying on a single channel is one of the first things I ask about.
When is a startup a good fit for a business angel?
Often, the "no" has nothing to do with you. An angel asks themselves:
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Does it fit my thesis? Sector, stage, geography.
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Is the check size right for me? Neither too big nor too small.
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Can I bring more than money? Contacts, experience, customers.
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Can it return my money several times over? What revenue it would take to return the investment three, five or ten times, and whether the market is big enough.
Choosing well who you pitch to saves you a lot of "no"s that say nothing about your startup.
Do it with a method Look at your startup the way an angel will. The Startup Index Score evaluation reviews your startup against what business angels and pre-seed and seed investors at your stage look at, and marks which numbers you only state, which you back up and what's missing. Free: your level from 1 to 5 and your first three priorities. (How the evaluation works)
What does a business angel ask for in return?
Mainly, a stake in your company. But alongside the percentage they usually ask for terms worth understanding before the first meeting:
| What they usually ask for | What it means for you |
|---|---|
| An equity stake | You give up part of the company; how much depends on the valuation |
| Regular reporting | Numbers and progress every month or quarter |
| A shareholders' agreement | Rules on decisions, partners leaving and selling the company |
| Investor protections | The right to take part in future capital increases (pre-emption) and, sometimes, anti-dilution clauses if the next round is at a lower valuation |
| Sometimes, a say in key decisions | An advisory board seat or a place on the board |
Tip Read the terms as a whole, not just the valuation. A high valuation with tough terms can cost you more than a reasonable one with clean terms. For the legal side, work with a lawyer who has done rounds before.
How does the investment process with an angel work?
It varies by investor, but it usually goes in this order:
- First contact. Best if it comes through a warm introduction from someone they trust.
- First meeting. They decide whether they want to know more. The five things in this guide carry the weight here.
- Questions and a second meeting. They dig into numbers, team and risks. (The questions an investor will ask you · Questions at your stage)
- Checks, or due diligence. They ask for documents and verify what you've told them. (Pre-seed and seed data room)
- Terms. Valuation, amount and conditions are agreed, often in a term sheet.
- Signing and funds. Shareholders' agreement, the capital increase in front of a notary (in Spain) and registration.
Several months can pass between first contact and the money in your account. Build that into your runway.
Where can you find business angels for your startup?
Look for investors who have already backed companies in your sector and at your stage. The usual routes are:
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Angel networks and investment clubs, which bring several investors together and run pitch events.
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Accelerators and incubators, which often introduce their startups to investors.
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Other founders who have already raised: their recommendation opens doors.
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Investment platforms and startup communities in your city or sector.
Two concrete shortcuts: if you're raising in Spain, look at the networks that belong to AEBAN, the Spanish association of angel networks. And when you find an investor who fits, ask a founder from their portfolio to introduce you. Nobody will introduce you better than someone they've already backed.
Common mistake Sending the same email to a hundred investors. Ten well-chosen investors, properly researched and reached through introductions, usually lead to more useful meetings than a hundred cold messages.
What doesn't an angel tell you when they say no?
| What they say | What may be behind it, among other things |
|---|---|
| "It's too early" | They can't see market proof yet, or the numbers didn't back the story |
| "It's not a fit for our thesis" | The team didn't convince them, or it genuinely doesn't fit |
| "Let's keep in touch" | Something didn't convince them and they won't say what, or they have too many deals and yours didn't stand out |
| "We need to see more traction" | They don't yet see real traction |
"Out of every 10 founders who didn't close their round, 9 didn't have the full picture of why." — Jordi Gil
If you've already had several "no"s, review before you keep pitching. (An investor said no)
Why are business angels wary of a perfect story?
The best angels are suspicious precisely of what's told too well.
What I've seen Working for a European investor, we met the three founders of a stock-market investing startup, first together and then separately. The method was presented as almost infallible, but small contradictions appeared and, as we pulled on them, they grew. The investor saw it for himself and decided not to go in.
Are there tax benefits for business angels in Spain?
Yes. Spanish personal income tax (IRPF) includes a relief for investing in newly or recently created companies: up to 50% of the amount invested, on a maximum base of €100,000 a year. Among other conditions: the shares must be acquired at incorporation or in a capital increase within the following five years (seven for an emerging company under Law 28/2022); the company must be a public or private limited company (SA or SL) that isn't listed; the stake must be held for three to twelve years and can't exceed 40% of the capital, except for founding partners of an emerging company; and the company's equity can't exceed €400,000 at the start of the tax year. Some regions add their own reliefs.
For founders, this has a practical side: if your startup qualifies, tell investors and have the paperwork ready. It can make their decision easier. The rules change, so always check the current information from the Spanish Tax Agency and talk to a tax adviser. (Due diligence for business angels)
Checklist: before you meet a business angel
Before your meeting with a business angel
A guide, not a rulebook. You can print it.
In short
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A business angel invests their own money and decides on gut feel and little time.
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In Spain, the median was €20,000 a year per angel in 2024: rounds usually bring several together.
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They look at five things: team, market, numbers, risks and fit.
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Your numbers don't have to be huge: they have to be consistent with your story.
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Beyond the percentage, they ask for terms: read them as a whole.
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Many "no"s are about fit: choose carefully who you pitch to.
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A perfect story with no evidence raises suspicion.
Do it with a method Are you an investor? Ask the next startup that pitches you for its Startup Index Score dossier (Evaluating a startup as an angel investor). Are you a founder? Evaluate your startup for free in 30–40 minutes (Start the evaluation).
Frequently asked questions
How much does a business angel usually invest? In Spain, according to the Business Angels 2025 report by AEBAN and IESE, the median invested per angel in 2024 was €20,000 over the whole year, while the average was €95,525 (new and follow-on investments), pushed up by a few large investors. Many spread that amount across several startups.
What documents does a business angel ask for? Usually, after a good first meeting: incorporation deed and bylaws, cap table, accounts or management figures, key contracts and intellectual property. Having them ready speeds up the round and signals seriousness, because it shows the startup knows its own situation.
What percentage of the company does a business angel take? It depends on the amount and the valuation agreed, and there's no standard percentage. Across the whole round, founders usually give up a minority stake. What matters is that the dilution leaves room for later rounds and that the terms are reasonable.
How do I find the right business angels for my startup? Look for investors who have already backed your sector and stage: angel networks, accelerators, startup communities and introductions from other founders. Fitting their thesis matters as much as having a good startup; pitching to investors who don't fit just piles up rejections.
What makes a business angel say yes? Usually a combination of trust in the team, proof of real demand, numbers that match the story and a clear fit with what they're looking for. The Startup Index Score evaluation helps you see, before the meeting, which of those are backed up and what's missing.
Keep reading
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(The questions an investor will ask you, and how to prepare)
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(Pre-seed, seed and business angels: what each stage asks of you)
Sources
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AEBAN and IESE, "Business Angels 2025. La inversión en startups: actividad y tendencias": www.iese.edu/media/research/pdfs/78716.pdf
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CB Insights, "The top reasons startups fail," March 2026: www.cbinsights.com/research/report/startup-failure-reasons-top/
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DocSend, "Startup Fundraising" (2023): www.docsend.com/startup-fundraising/
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Spanish Tax Agency (Agencia Tributaria), relief for investing in newly created companies: sede.agenciatributaria.gob.es/Sede/ca_es/Ayuda/25Presentacion/100/9_2.html
About the author
Jordi Gil is the creator of Startup Index Score. He has spent almost 30 years developing projects and working with startups across the Americas, Europe and Asia, including alongside investors deciding where to invest. (Meet Jordi Gil)