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Attracting Angel Investors

Written by: Lana Larder

Article Overview: What is an Angel Investor? Why should you use Angel Investors? What do Angel Investors invest in? How much is a typical investment? What should your proposal address?

Attracting Angel Investors

What is an Angel Investor? Originally "Angels" were referred to people who financed broad way plays when all else failed. Today "Angels"have become common among the investment community and refers to high net-worth individuals that invest their own personal funds inbusinesses. In Canada, there are well over 200,000 potential angel investors that annually invest about $3 billion in Canadian businesses.

Angel investors are individuals who invest their own capital in fledgling businesses, both in the technology and non-technology areas. Research shows that such individuals typically have run their own small businesses, have significant net worth and income, tend to be college-educated and are extremely discerning in the projects they will invest in. These Angels typically invest in a business after the entrepreneur's "love capital" (capital from relatives and friends) has been exhausted.

Why should you use angel investors? As an entrepreneur, you have likely noticed the growing resistance of banks to finance small businesses. It is virtually impossible to obtain financing without having secured assets orproviding personal guarantees, etc. Angel investors are the logical source to provide financing to small business.

Angels primarily invest in early stage companies that have a strong management team, have a viable product/service that has a high market potential, that is one of its kind, and have a pre-money valuation of $10 million or less. Most angel investors seek to invest close to home-within a 150-km radius of where they live.

The amount of investment per company ranges from $10,000 to $150,000, although investments may range upwards of $500,000 to $1 million and up.

Angel Investors allow entrepreneurs to:

1. Find a source of capital.
   
   
2. Find an experienced investor that can provide guidance and support.
   
   
3. Make it all come together in a fast and efficient way
   
   

How will you attract the attention of potential investors? Angels will need to hear your answers to these questions before they will even consider helping you. At least your proposal should address the following:

• How much money do you need?
  
  
• Why do you need it?
  
  
• What are you willing to give up to get it?
  
  
• When and how can you pay it back?
  
  

Related Articles
  How To Find An Angel Investor
  Funding Your Start Up
  Who Are Angel Investors
  What's The Best Structure For A Pre-VC Investment?
  How Many Angels is the Right Number

Article Tags: Angel, Attracting, Investors



Related Forum Posts
toronto angel group - The Toronto Angel Group is a very hard group to get into. You have to have a very stable and viable business plan and they like to stick their fingers into your pie and they are usually looking to invest big bucks. Which means that they usually want to take control. If you look deeply into these groups you need to know someone or have a very good idea with potential clients backing you up. In my opinion, other sources of financing will give you better control of your business or learning to ask for the money upfront. One of the things I found is that new buisness owners are afraid to ask for the money upfront but every other business expects you to unless you have a proven credit history. Good luck with the Angel Investors
Re: SEEKING PRIVATE OR ANGEL INVESTOR - Do a Google search for Angel Investors. You will have many options to choose from. I think SCORES is one but I am not sure. Don't email them, pick up the phone and contact as many as you can. You need too have a rock solid business plan for these investors to even smile at the notion. Good luck with your journey.
Re: need a capitalist to hear me out - If you have solid business plan, there are thousands of Angel Investors and Venture Capitalists that will fund your project. Google "Venture Capitalist" and you will get tons of investors who are ready to fund your project
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
Re: HOW DO I STAND OUT FROM THE REST? - Attracting customers towards business is always being a difficult task. Top brands always try to attract customers and make some unique TV commercials for marketing purposes. You need to work on the same pattern. Keep an eye on your competitor and use unique, new or out of the box marketing techniques to divert the consumer’s attention towards your business.


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