Have you exhausted the financial help from your friends and family to take your business to the next level? What do you do? It’s time to start looking for someone who is willing to invest in your start-up. Angel investors are investors or a group of investors who are willing to provide you a second-round of funding or the seed money for a startup. In return for their favor, angel investors will take a portion of equity from your company. However, keep in mind that these investors will invest only a small amount of money but will expect a higher return and also a way out of the business down the line. There are cases where angel investors want a monthly management fee. This is because they are taking a huge risk on a relatively unproven venture.
Where do you Find Angel Funding?
Finding angel investors directly can be a bit difficult because they prefer to stay anonymous. There are a few angel investors who have professional managers screen deals for them. You have to find an investor who understands your industry and is familiar with your business model. We have put together a few pointers that will help you find an investor who will understands your needs.
- Call your nearest university – Universities that conduct entrepreneurship programs can help you find angel investors. You can schedule an appointment with the person who conducts the small business programs. They will help guide you in finding an investor.
- Websites – There are websites such as Angel List and Gust where you can locate angel investors in your area.
- Angel networks – There are certain investors who keep aside funds for angel investments. They form a network of investors who have a professional team to help screen entrepreneurs. Instead of having one person invest in a business, it would be a group of investors who invest in your business.
- Business Incubators – Another place where you can find angel investors is with business incubators. The president and CEO of the National Business Incubation Association (NBIA), Dinah Adkins, believes that there are around 1,000 business incubators in North America and they are more than willing to offer formal or informal access to angel investors.
- Venture Capitalist Clubs – These clubs are usually non-profit groups formed by angel investors. They sponsor events on numerous aspects of entrepreneurial such as writing a business plan, how to obtain SBA financing, current management trends, how to seek capital for your venture and much more.
Some other places to look for angel investors include Chamber of Commerce, Small Business Development Center or the Economic Development Agency. If you are banking with your local bank, they can give you information regarding the angel investments in your area.
It is a fact that Angel investors are a good source of funding for your small business. You should also realize that investors are not going to write blank checks for you. They will want to see a solid business plan, which displays the fact that there is a market for your product/services. No matter what, you will have to make a couple of presentations about your business strategies before you can convince them to invest in your dream project. A good investor will not only provide you your monetary benefits, but also give you their expertise advice as well as networking opportunities. Therefore, choose your Angel investor wisely.