--- title: "Prepare to make an angel investment: 3 vital steps" id: "409512" type: "post" slug: "prepare-to-make-an-angel-investment" published_at: "2024-10-01T15:16:40+00:00" modified_at: "2024-10-01T15:16:40+00:00" url: "https://seedlegals.com/resources/prepare-to-make-an-angel-investment/" markdown_url: "https://seedlegals.com/resources/prepare-to-make-an-angel-investment.md" excerpt: "Three must-know steps to take before you make an angel investment. Plus extra pro tips." taxonomy_category: - "Startup Guides" - "Investor Hub" --- 4 min read Expert reviewed This article has been fact-checked by a SeedLegals subject matter expert. [Meet our experts](https://seedlegals.com/authors-and-experts/) and learn more about our review process and quality assurance in our [editorial policy](https://seedlegals.com/editorial-policy/) . # Prepare to make an angel investment: 3 vital steps Published: Oct 1, 2024 Contents [1. Define your investment strategy](#1-define-your-investment-strategy) [2. Set yourself up for seamless SEIS/EIS tax relief](#2-set-yourself-up-for-seamless-seiseis-tax-relief) [3. Get your due diligence mindset on](#3-get-your-due-diligence-mindset-on) [Pro tip: nurture your network](#pro-tip-nurture-your-network) [Learn how to become an angel investor – for free](#learn-how-to-become-an-angel-investor-for-free) [Talk to an expert](#talk-to-an-expert) [WriterKaylin SullivanSenior Copywriter](https://seedlegals.com/resources/author/kaylin/) [ExpertZlatina TrifonovaCX Associate - Funding Rounds](https://seedlegals.com/resources/author/zlatina-trifonova/) [ExpertJonny SeamanInvestor Partnerships Manager](https://seedlegals.com/resources/author/jonny-seaman/) Becoming an angel investor isn’t just about throwing cash at the next “big idea” and hoping for the best. It’s about smart strategy, thorough research, and hopefully even a little tax relief cherry on top. If you’re ready to spot the next unicorn (or at least avoid sinking money into a donkey), here are three essential steps to prepare you for your next (or first) angel investment. ### Free course: Become an angel investor Five-minute video lessons delivered daily by email. Expertise from thousands of startup investments. Loads of bonus content. [Sign up now](https://seedlegals.com/angel-investor-course/) 🚨**NB:** Angel investing is risky. While you can make your money back exponentially, you can lose it too. Don’t invest money you’re not prepared to lose and always consult a financial advisor before making investment decisions. ## 1. Define your investment strategy Before you start looking at potential investment opportunities, take a step back and decide on your investment strategy. You don’t need to have every detail nailed down, but a basic plan can help you stay focused. Here are some questions to ask yourself: - **How much can you afford to invest?** Both financially and emotionally. - **How many investments do you want to make?** Most angels spread their bets across multiple startups. - **What sectors or industries interest you?** Is it tech, health, sustainability or something else? - **What stage do you want to invest at?** Do you want to invest in pre-seed, seed, Series A, etc? Make sure you understand the different stages and what suits you best. - **What level of involvement do you want?** Some angels take a hands-on role, offering mentorship and guidance, while others take a more passive approach. Having a clear sense of direction helps you navigate the seas of investment opportunities with confidence and purpose. The video above is an excerpt from our free course *Become an angel investor*. [Sign up now](https://seedlegals.com/angel-investor-course/) to dive deeper into investment strategy and more. It only takes ten minutes a day for one week. ## 2. Set yourself up for seamless SEIS/EIS tax relief > Make sure a company has obtained SEIS/EIS Advance Assurance before you invest. This is your golden ticket to tax breaks. It’s pre-approval from HMRC that the company meets the criteria required for you to get a tax break by making the investment. **But remember:** [SEIS/EIS Compliance](https://seedlegals.com/resources/seis-compliance/) > is how you actually get your certificates for the tax relief, so make sure the company completes this process after you invest and receive your shares. > > [Zlatina Trifonova](https://seedlegals.com/resources/author/zlatina-trifonova/) > SEIS/EIS Specialist, > > [SeedLegals](https://seedlegals.com) > > - [https://www.linkedin.com/in/zlatina-trifonova-b7628412b/](https://www.linkedin.com/in/zlatina-trifonova-b7628412b/) As an angel investor, you might be able to claim [SEIS/EIS tax relief](https://seedlegals.com/resources/what-is-seis-eis-an-essential-read-for-uk-startups/) if the company and your investment are eligible. The UK government created the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) to encourage investors to invest in high-risk startups. Some of the benefits include deducting up to 50% of your investment amount from your Income Tax bill, no Capital Gains Tax on your profits and more. To understand eligibility, read: [SEIS rules for investors](https://seedlegals.com/resources/seis-tax-relief/) and [EIS tax relief: guide for investors.](https://seedlegals.com/resources/eis-rules-investors/) You’ll need proper paperwork in place to claim your tax relief: - **Advance Assurance:** this is pre-approval from HMRC so you know the investment is on-track to get SEIS/EIS. Ask a company to show you their Advance Assurance, so you can invest with more confidence. - **Share Certificates:** after you’ve invested, make sure you’ve got your share certificates. - **SEIS3 or EIS3 forms:** these are your golden tickets for tax relief claims. **Pro tip: get expert assistance.** The bureaucracy can be a headache. You don’t have time for that. We make SEIS/EIS seamless for investors and founders. Our SEIS/EIS service is included in our [investor subscription plan.](https://seedlegals.com/resources/seedlegals-for-investors-membership/) ## 3. Get your due diligence mindset on Due diligence means researching and verifying the business you’re considering investing in. This step is crucial and can make or break your investment. Think of it like vetting a potential business partner or a new hire — you wouldn’t jump into it without thoroughly checking things out. What should you focus on? Here are some pointers: - **The founders:** do they have the skills, passion, and experience to make the business work? What’s their track record like? - **The business model:** is there a clear plan for generating revenue? Does it make sense? Will it scale? - **Market potential:** how big is the market for this product or service? Is it growing? - **Competition:** who are the key competitors? How does this startup stand out? - **Financials:** what’s their cash flow like? How long will the current funding last? - **Legals and compliance:** do they have essential legal docs in place like IP Agreements and Founder Agreements? Does the company follow necessary compliance procedures? Take your time here and don’t be afraid to ask tough questions. After all, you’re the one taking the risk. **Dive deeper:** read our article [Before you invest: questions to founders.](https://seedlegals.com/resources/questions-to-ask-founders-before-investing/) ## Pro tip: nurture your network As an angel investor, your network is your superpower. From co-investors to founders, building relationships will not only help you find the best deals but also increase your credibility as an investor. Join [angel syndicates](https://seedlegals.com/resources/what-is-an-investor-syndicate/) , attend pitch events, and keep your LinkedIn profile polished. After all, who you know can be just as important as what you know when it comes to angel investing. A vibrant network gives you access to more opportunities and allows you to tap into shared knowledge. Plus, sharing the ride with other experienced angels can make the journey less lonely and more fun. ##### SeedLegals events ### Join our community of founders and investors Stay up to date with our latest events. In-person networking, webinars, open mic pitching and more. Updates to your inbox weekly. [Sign up](https://seedlegals.com/events/) ## Learn how to become an angel investor – for free Want to learn how to invest in startups? Or gain new tips and tricks on angel investing? We’ve got the course for you. Learn the step-by-step on how top angels make investments: ✅5 short video lessons straight to your inbox ✅Expertise from thousands of startup investments ✅Loads of bonus content ✅Insights from industry experts It’s free and only takes 10 minutes a day for one week. [Sign up now](https://seedlegals.com/angel-investor-course/) and we’ll send you the first email right away. ## Talk to an expert We make it easier and simpler to invest in startups. Learn more about how we help [here](https://seedlegals.com/resources/seedlegals-for-investors-membership/) and [book a free call](https://seedlegals.com/meetings/investor-interest/) with one of our experts who can talk you through it. Free course: Become an angel investor 1 week. Under 10 minutes a day. Video lessons delivered by email. Created by industry experts. ## Related posts [5 min readWhy you can't validate your startup idea, and what to do insteadMost founders think they have validated their startup idea. Here is why the evidence usually fails, and the three questi... Charles Hope](https://seedlegals.com/resources/validate-your-startup-idea/) [4 min readMost founders don't think about GDPR until someone asks for their dataOf course you ignore GDPR. Right up until you get an email “Send me all my data. Delete everything you have on me.” Sud... 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