This is probably the shortest article you will find on Venture Giants – but possibly the most valuable!
You should NEVER pay a legitimate Angel Investor any upfront money for them to invest in your business. Of course there is nothing wrong with paying for a matching service on an online angel investment network or deal review fee to an angel network group, but these fees are nominal and cover the service or group overhead.
Though it is very unlikely that you will meet Angel investors that ask you for upfront payment, always be diligent.
There are various investment scams taking place on the internet and they are more popular than ever. Be very aware of potential angel investors that you meet on other networks making comments like “I need to have you commit £1000 in order for my solicitor to prepare the documents to release your funds so I can invest in your business.”
As an entrepreneur, you must always carry out your own due diligence on potential investors and if they say they have invested in companies before, always ask to see their portfolio with company contact details. You can also carry out company credit checks for a nominal fee.
Should I ever pay upfront fees to an Angel Investor?
The best advice remains that if it doesn’t feel right in your gut – walk away.