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Angel Investors – How to Interest Them in Your Business

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Article Overview: Angel Investors are considered by many to be the best type of investor in your business. Angels are usually successful business owners and entrepreneurs who can also bring you valuable industry experience, executive knowledge, creative ideas and contacts. They can usually afford to indulge their love or risk and are often seeking new business challenges. To be an angel in the USA, one must be an "accredited investor," which the Securities and Exchange Commission defines as someone with a net worth of at least $1 million or an annual salary of at least $200,000. Similar rules exist in other countries.

Angel Investors – How to Interest Them in Your Business

Angel Investors are considered by many to be the best type of investor in your business. Angels are usually successful business owners and entrepreneurs who can also bring you valuable industry experience, executive knowledge, creative ideas and contacts. They can usually afford to indulge their love or risk and are often seeking new business challenges. To be an angel in the USA, one must be an "accredited investor," which the Securities and Exchange Commission defines as someone with a net worth of at least $1 million or an annual salary of at least $200,000. Similar rules exist in other countries.

So how do you attract and investor to your business and are they really what you want?

Build a Convincing Case: Angel investors may be willing to take on more risk than most, but they still need to see a well thought out business plan with a proven product that has a recognizable and eager market need backed by a competent management and development team.

Establishing Your Market: Your angel will need to be convinced that your business will meet the market need and that there is a clear “barrier to entry” from competing companies. They will hardly want to invest in your company only to see your marketing advantage disappear. Typical barriers to entry are: patents, cost of development and proprietary processes.

Your Management Team: Angels they will want to know that their investment is in safe hands. They will want to know the quality and experience of your managers and that they are all committed to your company.

A Great Business Plan: This defines your business, market, potential customers and your goods and services as well as the strength of your management team. It lets your angel have a good idea of your financials and how they will profit from investing in your business. Your business plan is not only a great selling tool it also assists you in planning and developing your business, placing it on a firm foundation. Consider using a professional business planning service for this. Not only will they work with you in producing a great business plan, but a good company will identify your business weaknesses and suggest better ways to do things. By a good business planning company – that is not one that charges less than $500 – you’ll get a plan and nothing more. Look for a company that charges a rate that allows them to offer you consultancy, advice and assistance as well.

Put Your Money where your Mouth is: If you want to start a business, be prepared to invest your own money. Entrepreneurs who expect angels to risk money in their venture, should be as confident about their own money. Entrepreneurs who are not willing to assume such a risk are not considered serious by investors and will probably not receive funding.

Find the Right Angel: Angels typically invest in companies that they know something about. Identifying appropriate angels will increase your chances of success. When pitching, ask them what they look for in a company, how much they typically invest, what kind of return they expect on their money.

Expect the Angel to be Involved: Entrepreneurs should also be choosy about whom they take money from. Make certain that you really know your Angel, understand their motivation and expectations for exit strategy and ROI (return on investment). Your angel will probably want a seat on the board and definitely a say in how you spend their money. Be prepared for this – not only do they need to protect their investment but they also will have knowledge and experience that your company will greatly benefit from. Being able to answer angel questions without feeling threatened is crucial to building a professional and mutually profitable relationship. Knowledgeable angels with good connections can jump start a company and keep it thriving. Well-connected angels can even make it easier to get additional rounds of financing including venture capital.

Professionalism Persistence and Patience: Raising capital is a time-consuming, ego-challenging process. It is not unusual for a startup entrepreneur to spend 50%-70% of his time raising capital from angel investors, a process that can average 3-6 months and in an uncertain market, it take even longer. Efforts to horde stock, inflate valuations or produce unbelievable financials will make the company less attractive to suitors. Let experienced professionals - produce your financials and manage your legal activities.

Lastly entrepreneurs must be determined, passionate about their business and thick skinned. Remember this and good luck.

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

Article Tags: accredited investor, angel investors, annual salary, barriers to entry, business angels, business market, business plan, business planning, competent management, convincing case, creative ideas, firm foundation, industry experience, net worth, professional business, proprietary processes, safe hands, securities and exchange commission, successful business, typical barriers



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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
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
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.


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