Finding an Angel Investor
The time will come sooner or later when your growing business will need some capital investment. Sometimes a short term loan or line of credit will fit the need for quick cash. If you are looking for a longer term capital infusion, an angel investor may be a solution for you. Angel Investors have been referred to as “gap fillers” between traditional loans from family or friends and a venture capitalist. The key difference between an angel lender and other capital lenders, is that an angel investor is typically looking for an opportunity to bring their business experience to the company. Typically, they want some sort of active role in the company. Business owners should evaluate this proposition, and consider if they can benefit from this sort of arrangement.
One of the advantages of teaming up with an angel investor is that they can take your company to the next level almost overnight if capital investment (or lack of it) has been holding you back. Additionally, the angel investor typically has an eye for good business opportunities, and if he/she picks your business to partner up with, you may benefit from their input and expertise.
The good news is that angel investors are often actively looking for business opportunities to invest in. The bad news is that they reject about 75 percent of the opportunities that come across their desk. So, what are angel investors looking for when they consider new opportunities? For starters, they want to maximize their return on investment. Angel investors invest in companies that could give them a big fat payday in return. If you meet that obvious and important criteria, what else are angel investors looking for? A credible and effective management team with a solid business plan. You will likely need to sell your management team’s credentials to the angel investor, and have a clear plan of action ready to present.
Don’t forget that the angel investor will probably want an opportunity to be actively involved in the development of the new idea. Plan on finding out what level of participation the angel investor wants to have with your company, and find out if they have a timeline in mind for how soon the investment should pay off.
Start looking for an angel investor is close to home. Friends and family can be a good
starting point. People you know are often more comfortable with angel investing if they know you are
investing some of your own money. You can approach them with a simple business plan, and usually
not have to deal with lengthy legal agreements. Many angels gather in groups, pool their resources, and
vote on lending opportunities together.
The quickest way to locate angel investors is with an online
search using keywords, such as “Cleveland area angel investors” or “Arizona angel investors.” Use the
city or state geographic area near you, and review several search results to determine which angels
or angel groups could best meet your needs. Don’t limit yourself to one opportunity; some ideas get
declined numerous times, but use these as an opportunity to sharpen your sales pitch. Be willing to
make necessary changes to your plan.
|
