What is an Angel Investor? How do you entice one to invest in your small business? Please aid. Thank you. What is an Angel Investor?
Most angel investors are successful business leaders or professionals who make significant investments in other companies, usually early-stage startups. They typically invest in businesses within their particular area of experience and expertise.
The most important role of an angel investor is to infuse your startup with cash. But unlike other types of financing 鈥?such as bank loans 鈥?angel investors can do more than keep your company麓s coffers full. Angels often take a hands-on advisory or consulting role in the company, especially when it's just starting out.
Angels can be invaluable resources who help you to connect with future rounds of financing, to build your executive team, to choose advisory board members, and to meet potential business partners.
Keep in mind, however, that an angel investor is just that 鈥?an investor. They expect to turn a profit by owning a part of your company. Therefore, not only should you have a plan for providing them with a reasonable return on their money, but you also need to agree on the details of the plan. Typically, a cash return within five to seven years is considered reasonable and is often achieved by selling the company or taking it public.
What Makes an Angel Invest?
For an individual to invest in a company, many things come into play.
First, angel investors must believe in the business opportunity and know enough about it to become personally committed. Most experienced angel investors will not invest in a venture that is outside their personal realm of experience 鈥?unless it's an idea that intrigues them so much that they can't pass it up. Even then, they will often rely on the expertise of co-investors with whom they have a prior relationship.
Second, angel investors are usually keenly interested in the management team or the founders of the company 鈥?who are they and what kind of backgrounds and experience do they bring to the project? Can they implement the company's ideas? Will the angel investor enjoy and feel comfortable working with this group of people? Typically, angel investors don't just want to invest their money 鈥?they also want hands-on involvement in the company.
Last, is this a business to which they can add value? Do they know enough about the industry to be supportive? And, is this a venture that captures their interest 鈥?do they want to invest their personal time in it?
Remember, angel investing is as much as lifestyle as it is a business.
Angel Investing Tools on the Web:
This site matches potential investors with entrepeneurs: http://www.fundinguniverse.com/
And, here's an online network for business angels and investors: http://www.nbai.net/
Here's some related content as well:
Should I Seek Out Angel Investors? http://www.allbusiness.com/business-fina...
Angel Investor Financing for Small Businesses:
http://www.allbusiness.com/business-fina...
Also, here's a cool video: What Is the Difference between VC's and Angel Investors?
http://www.allbusiness.com/4353454-1.htm...
For all content concerning Angel Investing: http://www.allbusiness.com/business-fina...
Or, visit our Accounting and Finance advice center:
http://www.allbusiness.com/accounting/29...
We hope this helps with your small business goals. Basically and Angel Investor is a rich guy with extra money.
The best way to do this is network. You need a business plan and a type of business that you can convince someone they will make a very good return on their money in a certain period of time |
